News about Union Pacific

Union Pacific reported record third-quarter revenue and profits as higher volume, pricing and efficiency gains outweighed rising fuel prices and inflation. Volume grew 6%, revenue rose 15% to $7.19 billion, operating income increased 15% to $2.94 billion, and earnings per share rose 16% to $3.49. The operating ratio was 59.1%, a 0.1-point improvement from a year earlier. Domestic intermodal volume rose 13% and international intermodal 8%, while coal remains under pressure from low natural gas prices. The company raised its capital spending plan for this year to $3.5 billion from $3.3 billion.

Union Pacific (UNP) closed at $282.36 on October 13 and has returned 12.3% over six months, trailing both the Insider Monkey Billionaire Index (21.5%) and the State Street SPDR S&P 500 ETF (14.0%). The article argues its rail network is nearly impossible to rebuild, which helps it keep 40.98% of revenue as operating profit. However, revenue grew 11.5% last quarter while earnings grew only 6.2%, and the company carries $31.17 billion in debt. The $85 billion Norfolk Southern deal was filed twice and rejected once as incomplete, with regulatory review potentially running into 2027 amid opposition from unions and rival railroads. The stock trades at 19.34 times next year's expected earnings, which the author sees as fairly priced for the current business and cheap only if the merger goes through.