Union Pacific Corporation
) reported fourth quarter fiscal 2012 adjusted earnings of $2.19
per share, surpassing the Zacks Consensus Estimate of $2.16 as
well as the year-ago earnings of $1.99. Better-than-expected
earnings came on the back of higher core pricing and efficient
network operations despite weaker volumes. For the year 2012, the
company reported adjusted earnings of $8.27, up 23.1% year over
Revenues rose 3% year over year to $5,250 million in the fourth
quarter, but missed the Zacks Consensus Estimate of $5,343
million. Volumes (carloads) registered a dip of 2% year over year
due to lower coal and agricultural shipments. Average revenue per
car increased 5% year over year.
For full-year 2012, revenues rose 7% year over year to $20,926
million. While volumes dipped marginally by 0.3%, average revenue
per car rose 7% on a year-over-year basis.
Operating income leaped 7% year over year to $1,725 million in
the fourth quarter. For the full year, operating income was $
6,745 million, up 18% year over year.
Operating expenses for the quarter inched up 1% year over year to
$3,525 million. Higher depreciation expenses (up 10%) and
purchased services and materials expenses (up 5%) were primarily
responsible for the increase. Operating expenses for the year
rose 3% year over year to $14,181 million.
Operating ratio (defined as operating expenses as a percentage of
revenue) improved 120 bps year over year to 67.1% in the reported
quarter. For 2012, operating ratio saw an improvement of 290
basis points year over year to 67.8%. Further, the company's
customer satisfaction index reached to 93 from 92 in the year ago
revenues in the fourth quarter were $785 million, down 8% year
over year. Business volumes were down 9% year over year and
average revenue per car was flat year over year.
accounted for $466 million revenues, up 14% year over year.
Business volumes were up 9% year over year and average revenue
per car rose 5% year over year.
contributed $834 million in revenues, up 15% year over year.
Volume was up 14% year over year. Average revenue per car came in
flat year over year.
revenues saw a decline of 7% year over year to $990 million,
owing to 17% decline in volumes. However, average revenue per car
remained positive with 12% growth year over year.
generated revenues of $835 million, up 3% despite flat volumes on
a year-over-year basis. Average revenue per car was up 3% year
Intermodal segment revenues were $1,021 million, up 6% year
over year. Business volumes were up 2% year over year. Average
revenue per car was up 5% year over year.
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UNION PAC CORP (UNP): Free Stock Analysis
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revenues increased 14.3% year over year to $319 million.
Union Pacific exited 2012 with cash and cash equivalents of
$1,063 million, down from $1,217 million a year ago. Free cash
flows were $1,382 million at the end of the year compared with
$1,917 million in 2011.
Long-term debt was $8.8 billion in 2012 versus $8.7 billion in
2011. Adjusted debt-to-capitalization ratio decreased to 39.1%
from 40.7% at year-end 2011. Return on invested capital stood at
14.0% in 2012 compared with 12.4% in 2011.
Other Railroad Stocks
Other railroads that have already released their fourth quarter
Norfolk Southern Corp.
Kansas City Southern
). Both the companies surpassed their Zacks Consensus Estimates.
While Norfolk Southern registered a year-over-year decline in its
earnings, Kansas registered a substantial growth over the
Another stock worth considering within the sector is
Genesee & Wyoming Inc.
), which holds a Zacks Rank #1 (Strong Buy).
Union Pacific continues to deliver strong results across most of
its business groups including automotive, chemicals and
Intermodal. However, the near-term growth for Union Pacific is
expected to be tempered by lower coal and agriculture volumes
that will likely weigh on top-line growth going forward. Further,
stiff competition, unionized workforce and increased railroad
regulation might limit the potential upside for the stock.
Union Pacific currently has a Zacks Rank #4 (Sell).