Markets
NSC

Union Pacific's Q3 Earnings Beat, Sales Miss on Coal Woes

Union Pacific CorporationUNP reported third-quarter 2015 earnings of $1.50 per share, which came in well above the Zacks Consensus Estimate of $1.43. Earnings, however, declined 2% on a year-over-year basis. Figures have been adjusted in view of the two-for-one stock split carried out by the company in 2014.

Revenues decreased 10% year over year to $5.56 billion in the third quarter, falling short of the Zacks Consensus Estimate of $5.65 billion. The bulk of revenues came from freight revenues. A 10% decline in freight revenues hurt the top line. Declining coal shipments weighed on the railroad operator's results yet again. Volumes slipped 6%, with coal being the biggest culprit. Apart from coal, decreasing volumes of industrial products and agricultural products also led to the decline.

Operating income went down 5% year over year to $2.2 billion. Operating ratio (defined as operating expenses as a percentage of revenues) improved to 60.3% from 62.3% a year ago. During the quarter, the company bought back 13.8 million shares for more than $1.2 billion.

Segment Details

Agricultural freight revenues were $880 million, down 4% year over year. Business volumes decreased 3% year over year and average revenue per car declined 1%.

Automotive accounted for $529 million of freight revenues, flat year over year. Business volumes were up 5% year over year and average revenue per car fell 5% year over year.

Chemical contributed $882 million to freight revenues, down 6% year over year. Volumes declined 3% year over year. Average revenue per car dropped 3% year over year.

Coal revenues (freight) decreased 18% year over year to $898 million. Volumes declined 15% and average revenue per car fell 4% year over year.

Industrial Products generated freight revenues of $979 million, down 16% year over year on a 12% volume decline. Average revenue per car was down 4% year over year.

Intermodal segment freight revenues went down 11% year over year to $1.1 billion and volumes declined 4% year over year. Average revenue per car fell 7% year over year.

Other revenues declined 4% year over year to $347 million.

Liquidity

Union Pacific exited the third quarter of 2015 with cash and cash equivalents of $1,078 million, compared with $1,586 million at the end of 2014. Long-term debt stood at $12.8 billion in the third quarter of 2015 against $11 billion at the end of 2014. Adjusted debt-to-capitalization ratio increased to 44.5% from 41.3% at 2014 end.

Upcoming Release

Another transportation stock, Norfolk Southern Corp. NSC , will report results on Oct 28.

Zacks Rank

Currently, Union Pacific has a Zacks Rank #3 (Hold). Some better-ranked stocks in the transportation space are Ryanair Holdings RYAAY and Virgin America VA , both sporting a Zacks Rank #1 (Strong Buy).

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 >>

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

UNION PAC CORP (UNP): Free Stock Analysis Report

RYANAIR HLDGS (RYAAY): Free Stock Analysis Report

NORFOLK SOUTHRN (NSC): Free Stock Analysis Report

VIRGIN AMERICA (VA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

NSC RYAAY UNP

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More