Leading railroad company, Union Pacific Corporation (UNP - Analyst Report) last week announced its third quarter earnings estimate. The company expects earnings in the range of $2.45 to $2.48, which compares with $2.19 earned in the corresponding quarter last year. The Zacks Consensus Estimate for the third quarter 2013 is pegged at $2.47, representing an annualized growth rate of 12.86%.
Despite projecting significant growth over its year-ago quarter’s earnings, Union Pacific remained conservative over its earnings expectation. This resulted in projection lower than market estimates. As a result, share prices of the company have been falling since last Thursday. Union Pacific stock price closed at $152.73 on last trading day, down from $155.38 last Thursday and $153.90 on Friday closing.
One of the major concerns for Union Pacific is its dwindling coal volumes, which significantly remains impacted by natural gas prices. Further, the company also anticipates that one of its key revenue drivers, Intermodal can also be impacted by the uncertain economic condition that continues to hurt overall market demand.
Apart from earnings, the company also provided guidance for its third quarter operating revenues (approximately 4% to 4.5% year over year growth), core pricing (approximately 3.5% year over year) and operating ratio (150 basis points improvement). Further, it also stated that revenue losses and increased cost from Clarado floods would negatively impact operating income by approximately $10 million in the third quarter of this year.
Union Pacific, which operates with other railroads like Kansas City Southern (KSU - Analyst Report) CSX Corp. (CSX - Analyst Report) and Norfolk Southern Corp. (NSC - Analyst Report), has a Zacks Rank #3 (Hold).