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Union Pacific (UNP) Beats on Q2 Earnings, Posts Dim Outlook

Union Pacific Corporation’s UNP second-quarter 2020 earnings of $1.67 per share surpassed the Zacks Consensus Estimate of $1.61. However, the bottom line declined 24.8% on a year-over-year basis.

Operating revenues of $4,244 million missed the Zacks Consensus Estimate of $4,399.3 million. The top line also declined 24.2% on a year-over-year basis due to sluggish freight revenues (down 24%). Business volumes, measured by total revenue carloads, declined 20% year over year.

Operating income in the second quarter declined 27% year over year to $1,654 million. Operating expenses contracted 22% to $2,590 million. As a result, operating ratio (operating expenses as a percentage of revenues) deteriorated to 61% from 59.6% in the year-ago quarter due to weak shipments.

Moreover, this Zacks Rank #3 (Hold) company’s second-quarter effective tax rate came in at 24.3% compared with 23.7% in the year-ago quarter. Total capital expenses were$1,599 million in the second quarter. 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

Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,386 million, down 17% year over year. Revenue carloads too slid 15%. Moreover, average revenue per car fell 3% year over year.

Industrial freight revenues totaled $1,500 million, down 23% year over year. Also, revenue carloads fell 18% and average revenue per car fell 6% on a year-over-year basis.

Freight revenues in the Premium division were $1,086 million, down 33% year over year. Moreover, revenue carloads dropped 23% year over year. Moreover, average revenue per car declined 13%.

Meanwhile, other revenues slipped 24% to $272 million in the second quarter.

Liquidity

The company exited the June end quarter with cash and cash equivalents of $2,706 million compared with $831 million at the end of 2019. Debt (due after a year) amounted to $26,439 million at the end of the quarter from $23,943 million at 2019-end. Debt-to-EBITDA ratio (on an adjusted basis) deteriorated to 2.9 from 2.5 at 2019-end.

2020 Outlook

Owing to the COVID-19 led uncertainty looming in the economy, Union Pacific expects its full year 2020 carload volumes to be approximately around 10% compared with 2019 levels.

Sectorial Snapshot

Apart from Union Pacific, let’s take a look into some other Zacks Transportation sector’s second-quarter earnings like Canadian National Railway Company’s CNI, Kansas City Southern KSU and J.B. Hunt Transport Services JBHT.

Canadian National second-quarter 2020 earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) met the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and declined 21.8% year over year.

J.B. Hunt, carrying a Zacks Rank #3 (Hold), reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million.

Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 (Hold) company’s total revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million.

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

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