U.S. Markets open in 34 mins

United Pacific (UNP) Q4 Earnings Miss Estimates, Decline Y/Y

Zacks Equity Research

United Pacific Corporation’s UNP fourth-quarter 2019 earnings of $2.02 per share fell short of the Zacks Consensus Estimate by a penny. Moreover, the bottom line decreased 4.7% on a year-over-year basis, primarily due to decline in volumes.

Meanwhile, operating revenues of $5,212 million beat the Zacks Consensus Estimate of $5,165.1 million. However, the top line declined 9% year over year due to sluggish freight revenues (down 10%).

The year-over-year contraction in the top line was due to an 11% reduction in business volumes, measured by total revenue carloads.

Operating income in the fourth quarter declined 5% year over year to $2.1 billion. Operating expenses declined 12% to $3.11 billion. As a result, operating ratio (operating expenses as a percentage of revenues) improved to 59.7% from 61.6% a year ago, driven by this railroad operator’s efforts to control costs so as to offset weak shipments. Notably, lower the value of the metric, the better.

Moreover, this Zacks Rank #3 (Hold) company bought back 35 million shares worth $5.8 billion in 2019. Fourth-quarter effective tax rate came in at 25.3% compared with 22.9% a year ago. Total capital expenses were $3.2 billion in 2019.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Union Pacific Corporation Price, Consensus and EPS Surprise

 

Union Pacific Corporation Price, Consensus and EPS Surprise

Union Pacific Corporation price-consensus-eps-surprise-chart | Union Pacific Corporation Quote

 

Segmental Performance

Freight revenues in the Agricultural Products were $1.1 billion, down 2% year over year. Revenue carloads too slid 2% year over year. However, average revenue per car was flat year over year.

Freight revenues in the Energy division were $838 million, down 25% year over year. Also, revenue carloads fell 20% year over year. Moreover, average revenue per car decreased 6%.

Industrial freight revenues totaled $1.41 billion, flat year over year. Revenue carloads and average revenue per car were also unaltered year over year.

Freight revenues in the Premium division were $1.51 billion, down 14% year over year. Moreover, revenue carloads dropped 15% year over year. However, average revenue per car inched up 1% year over year.

Meanwhile, other revenues slipped 2% to $361 million in the fourth quarter of 2019.

Liquidity

The company exited the quarter with cash and cash equivalents of $831 million compared with $1,273 million at the end of 2018. Debt (due after a year) mounted to $23.94 billion at the end of the quarter from $20.93 billion at 2018 end. Debt-to-EBITDA ratio (on an adjusted basis) deteriorated to 2.5 from 2.3 at 2018 end.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting fourth-quarter earnings reports from key players, namely United Parcel Service, Inc. UPS, SkyWest, Inc. SKYW and Old Dominion Freight Line, Inc. ODFL. While UPS and SkyWest will report fourth-quarter earnings numbers on Jan 30, Old Dominion will release the same on Feb 6.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
 
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research