Union Pacific (
) will report earnings Thursday morning before the open, and
analysts are expecting another quarter of solid growth.
The consensus estimate calls for $2.37 a share, a 17% increase
from the year-ago period.
The railroad industry in general and Union Pacific, in
particular, have been on a roll. As the economy has recovered,
the amount of goods shipped has also recovered. High prices for
diesel fuel have made rail more attractive to shippers compared
UP, with rail lines in 23 western states covering two-thirds
of the country, ships an average of 200 million tons of coal a
year from mines in the Southern Powder River Basin of Colorado,
Utah, Wyoming and Illinois to electric utilities. Coal production
has been slipping because of increased regulation, but Union
Pacific says agricultural shipments have been more than making up
Intermodal shipping -- shipments in containers that can be
transferred from ship, rail car or truck -- is also gaining in
And the railroad has opened a new Shale 2 Rail service for
transporting shale oil to refineries. Add to that growth in
Mexico, where Union Pacific is the leading rail connection with
the U.S., and the company's prospects look good.
The five-year annualized EPS growth rate is 21%, with an
Earnings Stability Factor of 10 on a 0 to 99 scale in which low
numbers correspond to stable earnings growth.
Quarterly earnings per share rose 13% for three straight
quarters, then 16% in the most recent quarter. Sales growth has
been rising at a single-digit rate the past seven quarters.
UP just raised its quarterly dividend from 79 cents to 91
cents, which works out to a 2% annual yield. The dividend was 22
cents as recently as 2008, when the stock split two for one.