Financial Data and Key Metrics Changes - Union Pacific reported a full-year net income of $7.1 billion, up 6%, and earnings per share of $11.98, up 8% compared to 2024 [9] - Freight revenue, excluding fuel surcharge, grew 3% year-over-year, setting a record for the full year [9] - The adjusted operating ratio improved by 60 basis points to 59.3% compared to 2024 [10] - Fourth quarter operating revenue was $6.1 billion, a decrease of 1% versus 2024, with freight revenue declining by 1% on a 4% lower volume [12] Business Line Data and Key Metrics Changes - Bulk segment revenue increased by 3% on a 3% increase in volume, driven by strong coal demand [19] - Industrial revenue was up 1% for the quarter on a 1% increase in volume, with strong core pricing gains offset by business mix [20] - Premium revenue declined by 6% despite a 10% increase in volume, reflecting business mix and higher fuel surcharges [20] Market Data and Key Metrics Changes - The competitive and global market environment impacted pricing and mix, particularly in agricultural sectors [12] - Domestic intermodal volumes faced challenges due to lower West Coast imports and customer shifts, although 2025 was the best-ever year for domestic intermodal [20] Company Strategy and Development Direction - The company aims to maintain industry-leading operating ratios and return on invested capital while focusing on safety, service, and operational excellence [32] - Capital spending for 2026 is targeted at approximately $3.3 billion, prioritizing core infrastructure and modernization [30] - The merger with Norfolk Southern is expected to enhance competition and improve service offerings, with a focus on seamless operations [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational capabilities despite a challenging economic backdrop, with expectations for mid-single-digit earnings growth in 2026 [34] - The company anticipates inflationary pressures and a softer economic environment but remains focused on driving productivity and efficiency [33] - Management is optimistic about coal and grain markets, expecting continued strength supported by business development efforts [24] Other Important Information - The company achieved record safety performance in 2025, with significant improvements in personal injury and derailment rates [26] - Cash return to shareholders grew by 25% in 2025, totaling $5.9 billion through dividends and share repurchases [17] Q&A Session Summary Question: How will the company improve operating ratio in 2026 given inflation and no expected price increases? - Management indicated that improvements will come from productivity gains and a more favorable business mix, despite challenges in pricing [46][48] Question: Can you elaborate on the $2 billion targeted net revenue gains from the merger? - Management expressed confidence in the projected traffic growth and emphasized that the operational efficiency will handle the increased traffic effectively [54][56] Question: What is the expected impact of regulatory changes on the business? - Management supports increased competition and optionality for customers, emphasizing the need for clarity in regulatory details [80][82]

FOURTH QUARTER 2025 EARNINGS UNION PACIFIC CORPORATION Cautionary Information Certain statements in this presentation are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause the Company's (or, as it relates to the Transaction (as defined below), the combine ...

Union Pacific Corp. on Tuesday reported fourth-quarter profit of $1.85 billion on revenue of $6.09 billion, both short of Wall Street expectations. Per-share earnings came up short for the Omaha, Neb.-based company (NYSE: UNP) at $3.11. Adjusted earnings came to $2.86 per share. Analysts’ consensus was for earnings of $2.90 per share, on revenue of $6.14 billion. The company, which is in the process of merging with Norfolk Southern (NYSE: NSC) to form the first transcontinental railroad, said operating ...

Core Insights - Union Pacific Corporation (NYSE:UNP) is recognized as one of the 12 Most Profitable Dividend Stocks to consider for investment in 2026 [1] Merger Update - Union Pacific's proposed $85 billion merger with Norfolk Southern was rejected by the US Surface Transportation Board (STB) due to an incomplete application, which lacked necessary information regarding market share and competitive impact [2][3][4] - The STB's decision was made "without prejudice," allowing Union Pacific and Norfolk Southern the opportunity to resubmit their application after addressing the identified gaps [2][4] - Canadian National's submission highlighted deficiencies in the merger application, particularly regarding competitive disclosures and the identification of affected routes and shippers [5] Company Overview - Union Pacific operates one of the largest rail networks in the US, covering over 23 states in the western two-thirds of the country, playing a crucial role in the domestic and global supply chain [7] - The company argues that the merger would enhance service reliability, shift freight from trucks to rail, maintain shipper choice, and provide broad public benefits while safeguarding union jobs [6]

Core Viewpoint - Scotiabank has raised its price target for Canadian National Railway Company (CNI) to C$163 from C$160, maintaining an Outperform rating, reflecting long-term confidence in the company's positioning rather than short-term catalysts [1] Group 1: Network Scale and Strategic Advantage - Canadian National Railway operates a vast network of approximately 32,000 kilometers, providing coast-to-coast service across Canada and extending into the US Midwest and Gulf regions, which is a significant competitive advantage [2] - The network functions as essential infrastructure, akin to a toll bridge, with high barriers to entry due to the time and capital required to replicate such a system, estimated to take decades and hundreds of billions [3] - The company has secured exclusive port access and invested in intermodal hubs, enhancing efficiency and customer integration into its network, which contributes to maintaining volume stability [3] Group 2: Operational Efficiency - Canadian National Railway boasts operating ratios around 62%, positioning it among the most efficient rail operators in North America, which is a critical aspect of its competitive moat [4]

Core Viewpoint - Susquehanna has raised its price target for CSX Corporation to $39, indicating a focus on fundamental improvements under new CEO Steve Angel, which may enhance long-term strategic flexibility [1] Financial Performance - CSX's fourth-quarter results were mixed, with revenue of $3.50 billion falling short of the expected $3.54 billion, and both revenue and profit missing expectations due to weaker industrial demand and lower export coal volumes [2][4] - The operating margin for the quarter was reported at 31.6%, an increase of 30 basis points from the previous year [4] Management Strategy - CEO Steve Angel highlighted the need for productivity, cost control, and capital discipline, with plans to focus on these areas more intensively in 2026 [3] - Management anticipates an operating margin expansion of 200 to 300 basis points in 2026 compared to adjusted 2025 levels, which positively impacted stock performance, lifting it by approximately 3.2% in extended trading [3]

Core Viewpoint - Union Pacific Railroad is celebrating 250 years of American independence and innovation with its first-ever coast-to-coast steam tour featuring the Big Boy No. 4014, the world's largest operating steam locomotive [1] Group 1 - The steam tour will include two commemorative locomotives, one of which is the new locomotive No. 1776 – America250, honoring the signing of the Declaration of Independence [1]

Core Insights - Union Pacific achieved its highest-ever quarterly freight revenue, operating income, and cash from operations, driven by strong volume growth, pricing gains, and productivity improvements [6][18] - The company is in advanced discussions with Norfolk Southern regarding a potential business combination, although no agreement has been confirmed [6][39] - Management remains confident in achieving its multi-year EPS CAGR target despite anticipated sequential volume moderation in the upcoming quarters [6][21] Financial Performance - Adjusted diluted earnings per share reached $3.03, a 12% increase, excluding a $115 million deferred tax benefit and a $55 million labor expense [4][11] - Operating revenue was $6.2 billion, a 2% increase, with freight revenue hitting a record $5.8 billion, up 4% [4][13] - The adjusted operating ratio improved to 58.1%, reflecting a 230 basis point enhancement [4][18] Revenue Drivers - Freight revenue excluding fuel surcharge grew 6%, achieving record quarterly and year-to-date totals [4][12] - Volume growth contributed 375 basis points to freight revenue, with Bulk segment volumes up 11%, Industrial up 3%, and Premium up 1% [4][8] - Core pricing and mix provided a 200 basis point benefit to freight revenue, with net pricing above inflation for the third consecutive quarter [4][12] Cost and Efficiency Metrics - Fuel expenses decreased by 8% due to an 11% drop in fuel prices, while the fuel consumption rate improved by 2% [4][17] - Compensation and benefits expenses rose by 5%, primarily due to the Brakeperson buyout, but increased only 1% when adjusted for this expense [4][15] - Workforce productivity improved by 9%, reaching an all-time quarterly record, while locomotive productivity increased by 5% [4][36] Shareholder Returns - The company returned $4.3 billion to shareholders through buybacks and dividends in the second quarter, with a 3% dividend increase announced, marking 19 consecutive years of increases [4][19] - The adjusted debt-to-EBITDA ratio ended at 2.8x, maintaining A-ratings from three credit agencies [4][19] Segment Trends - Bulk revenue increased by 10% with an 11% rise in volume, while Industrial revenue grew by 4% with a 3% increase in volume [8][24] - Premium revenue decreased by 4% despite a 1% increase in volume, reflecting challenges in international and domestic intermodal volumes [8][26] - Management anticipates continued growth in coal volumes driven by favorable natural gas pricing and new customer demand [8][27] Future Outlook - Management reaffirmed a high single to low double-digit 3-year EPS CAGR target, expecting 2025 EPS growth to align with this range [8][21] - The company plans to maintain operational improvements and cost control while seeking pricing opportunities that reflect service value [21][38] - External pressures, including tariff implications and changes in consumer behavior, are acknowledged as potential challenges for the second half of the year [8][21]

Industry Overview - The Zacks Transportation sector is facing challenges due to increased expenses, inflation-driven high interest rates, a decline in freight demand, and supply-chain issues [2][3] - Geopolitical uncertainties and tariff-related economic tensions are negatively impacting consumer sentiment and growth expectations [2] Oil Prices Impact - A decrease in oil prices, which fell by 7% in the October-December 2025 period, is expected to positively affect the bottom-line growth of transportation companies, as fuel costs are a significant input [4] Company Earnings Expectations Union Pacific Corporation (UNP) - The Zacks Consensus Estimate for UNP's Q4 2025 earnings is $2.89 per share, reflecting a 0.7% decline year-over-year, with revenues estimated at $6.14 billion, indicating 0.3% growth [7] - Cost-cutting measures are anticipated to support bottom-line performance, although geopolitical uncertainties and inflation may negatively impact results [8] - Current predictions do not indicate an earnings beat for UNP, with an Earnings ESP of -1.25% and a Zacks Rank of 3 [9] United Parcel Service (UPS) - The Zacks Consensus Estimate for UPS's Q4 earnings is $2.23 per share, showing a year-over-year decline of 19.27%, with revenues expected at $24.01 billion, down 5.1% [10] - Cost controls and network efficiency are expected to help UPS mitigate lower volumes, with total operating revenues forecasted to decline by 5.4% year-over-year [12] - The model predicts an earnings beat for UPS, with an Earnings ESP of +0.74% and a Zacks Rank of 3 [13] American Airlines Group Inc. (AAL) - The Zacks Consensus Estimate for AAL's Q4 revenues is $14.07 billion, indicating a 3.02% year-over-year growth, while earnings are expected to be 38 cents per share, down 55.81% from the previous year [14][15] - AAL's performance is expected to benefit from increased domestic air-travel demand, although rising labor and airport costs, along with geopolitical uncertainties, may weigh on operations [15] - Current predictions do not indicate an earnings beat for AAL, with an Earnings ESP of -1.21% and a Zacks Rank of 3 [16] JetBlue Airways Corporation (JBLU) - The Zacks Consensus Estimate for JBLU's Q4 loss per share has widened to 45 cents, indicating a significant increase in losses compared to the previous year, with revenues expected at $2.22 billion, reflecting 2.6% growth [17] - JBLU's efforts to expand connectivity in response to demand are likely to support performance, while lower oil prices may also benefit the airline [18] - Current predictions do not indicate an earnings beat for JBLU, with an Earnings ESP of -5.89% and a Zacks Rank of 3 [19]

Core Viewpoint - Dividend stocks are gaining renewed attention, with Bank of America forecasting an increase in dividend payouts in 2026, projecting growth of about 8% compared to 7% in 2025 [1][2]. Dividend Growth and Market Environment - Dividend growth typically lags behind earnings growth by approximately three quarters, suggesting that after a strong earnings year in 2025, dividend increases are expected to follow [2]. - The S&P 500's dividend payout ratio is near a record low of around 30%, providing companies with the flexibility to raise payouts [3]. - The market is shifting towards a total return environment, where dividends are anticipated to play a more significant role in overall returns compared to the past decade [3]. Investment Strategy - Companies that consistently raise dividends due to earnings growth, rather than stretched balance sheets, are favored for investment [4]. - A methodology for selecting dividend stocks includes screening for stable companies with strong dividend growth, a net profit margin exceeding 20%, and net income above $1 billion [6]. Company Highlights NextEra Energy, Inc. (NYSE:NEE) - Net profit margin stands at 20.04% with a net income of $6.50 billion [9]. - Morgan Stanley raised its price target for NextEra Energy to $104, citing a refreshed view on utilities and independent power producers [9]. - The company is benefiting from a long-term regulatory plan starting in 2026, allowing for an 11% return on equity, which enhances visibility into cash flows while investing in clean energy projects [11]. - NextEra Energy Resources is expected to see significant growth, with an anticipated 15 gigawatts of incremental power demand from AI customers by 2035 [12]. CSX Corporation (NASDAQ:CSX) - CSX has a net profit margin of 20.55% and a net income of $2.0 billion [14]. - Following its fourth-quarter results, Susquehanna raised its price target for CSX to $39, emphasizing a focus on cost control and improved returns under new CEO Steve Angel [14]. - The company plans to enhance productivity and capital discipline in 2026, forecasting an operating margin expansion of 200 to 300 basis points compared to adjusted 2025 levels [16]. - CSX reported an operating margin of 31.6% for the quarter, with revenue of $3.50 billion, which fell short of analyst expectations [17].