Union Pacific (UNP) Gears Up for Q3 Earnings: What's in Store?
Union Pacific Corporation UNP is scheduled to report third-quarter 2023 results on Oct 19, before market open.
UNP has a disappointing earnings surprise history, having surpassed the Zacks Consensus Estimate in two of the preceding four quarters (missed twice), the average miss being 0.33%.
The Zacks Consensus Estimate for third-quarter 2023 earnings has declined 4.9% over the past 60 days.
Given this backdrop, let’s check out the factors that might have influenced Union Pacific’s performance in the quarter under review.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
We expect Union Pacific’s performance to have been affected by soft revenues due to weak freight demand. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $6.1 billion, indicating a 7.8% decline from third-quarter 2022 actuals.
Freight revenues account for the bulk of the top line. We estimate the metric to decline 5% from third-quarter 2022 levels.
On the flip side, we expect fuel costs to be down 26.6% from the year-ago levels to $2.91 (average fuel cost per gallon).
Operating ratio (operating expenses as a percentage of revenues) is likely to have improved sequentially. Our third-quarter 2023 projection for this key metric is currently pegged at 61.9%. Operating ratio was 63% in second-quarter 2023. A lower value of this metric is preferable.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for UNP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Union Pacific currently has an Earnings ESP of -5.32% (the Most Accurate Estimate is currently pegged at $2.40 per share, 14 cents below the Zacks Consensus Estimate) and a Zacks Rank #3.
Highlights of Q2
Union Pacific's second-quarter 2023 earnings of $2.57 per share missed the Zacks Consensus Estimate of $2.75. Moreover, the bottom line plunged 12.3% on a year-over-year basis.
Operating revenues of $5,963 million missed the Zacks Consensus Estimate of $6,121.3 million. The top line tumbled 4.9% on a year-over-year basis due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
Old Dominion Freight Line ODFL has an Earnings ESP of +0.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ODFL is scheduled to report third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for earnings has been revised 2.91% upward over the last 60 days. ODFL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3.86%.
Kirby Corporation KEX has an Earnings ESP of +6.52% and a Zacks Rank #2. KEX is slated to report third-quarter 2023 earnings on Oct 26.
The Zacks Consensus Estimate for third-quarter 2023 earnings has remained flat over the last seven days. KEX has a stellar earnings surprise history, having outshined the Zacks Consensus Estimate in each of the preceding four quarters by an average of 8.03%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Union Pacific Corporation (UNP) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
Kirby Corporation (KEX) : Free Stock Analysis Report
