Can Union Pacific Report Another Good Quarter?

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Union Pacific ( UNP ) 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 to trucks.

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 for it.

Intermodal shipping -- shipments in containers that can be transferred from ship, rail car or truck -- is also gaining in popularity.

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: UNP

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