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Union Pacific's Q4 Earnings Beat Estimates & Revenues Lag
UNPUnion Pacific(UNP) ZACKS·2025-01-23 16:56

Core Viewpoint - Union Pacific Corporation (UNP) reported strong fourth-quarter 2024 earnings, with earnings per share of 2.91,exceedingtheZacksConsensusEstimateof2.91, exceeding the Zacks Consensus Estimate of 2.78, reflecting a year-over-year improvement of 7.4% driven by operational efficiency and favorable pricing [1][2]. Financial Performance - Operating revenues for the fourth quarter were 6.12billion,slightlybelowtheZacksConsensusEstimateof6.12 billion, slightly below the Zacks Consensus Estimate of 6.15 billion, marking a year-over-year decline of 0.6% due to lower fuel surcharge revenues and an unfavorable business mix [2]. - Freight revenues, which constitute 94.6% of total revenues, decreased by 0.2% to 5.79billion,surpassingtheestimateof5.79 billion, surpassing the estimate of 5.71 billion, while other revenues fell by 7% to 332million[3].−Totaloperatingexpensesdecreasedby4332 million [3]. - Total operating expenses decreased by 4% year over year to 3.6 billion, with fuel expenses dropping by 23% and other cost items declining by 22% [4]. Segment Performance - Bulk freight revenues were 1.86billion,down41.86 billion, down 4% year over year, but better than the projected decline of 8.5%, with segmental revenue carloads also declining by 4% [5]. - Industrial freight revenues increased by 1% year over year to 2.09 billion, with segmental revenue carloads remaining flat [5]. - Premium division freight revenues rose by 3% year over year to 1.83billion,withrevenuecarloadsimprovingby131.83 billion, with revenue carloads improving by 13% [6]. Liquidity and Debt - At the end of the fourth quarter, Union Pacific had cash and cash equivalents of 1.02 billion, down from 1.06billionayearearlier,whiledebtdecreasedto1.06 billion a year earlier, while debt decreased to 29.77 billion from 31.16billion[7].Outlook−Forfull−year2025,UnionPacificanticipatesthatvolumewillbeaffectedbymixedeconomicconditionsandfluctuationsincoaldemand,butexpectspricinggainstopositivelyinfluencetheoperatingratio[8].−Thecompanyaimsforearningspersharegrowthalignedwithathree−yearCAGRtargetofhigh−singletolow−doubledigits,whilemaintaininganindustry−leadingoperatingratioandreturnoninvestedcapital[8].CapitalAllocation−UnionPacific′slong−termcapitalallocationstrategyincludesacapitalplanof31.16 billion [7]. Outlook - For full-year 2025, Union Pacific anticipates that volume will be affected by mixed economic conditions and fluctuations in coal demand, but expects pricing gains to positively influence the operating ratio [8]. - The company aims for earnings per share growth aligned with a three-year CAGR target of high-single to low-double digits, while maintaining an industry-leading operating ratio and return on invested capital [8]. Capital Allocation - Union Pacific's long-term capital allocation strategy includes a capital plan of 3.4 billion and share repurchases between 4billionand4 billion and 4.5 billion [9].