Union Pacific(UNP) ZACKS·2025-01-23 16:56Core Viewpoint - Union Pacific Corporation (UNP) reported strong fourth-quarter 2024 earnings, with earnings per share of $2.91, 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 $6.12 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 $5.79 billion, surpassing the estimate of $5.71 billion, while other revenues fell by 7% to $332 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 $1.86 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 $1.83 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 $1.06 billion a year earlier, while debt decreased to $29.77 billion from $31.16 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 $4 billion and $4.5 billion [9].