United Pacific Corporation (UNP - Free Report) reported better-than-expected earnings in first-quarter 2019 just like fellow railroads CSX Corporation (CSX - Free Report) and Kansas City Southern on Apr 16 and 17, respectively.
Union Pacific’s earnings of $1.93 per share surpassed the Zacks Consensus Estimate by 4 cents. The bottom line also increased 15% on a year-over-year basis primarily due to lower costs. This outperformance on the earnings front seems to have found favor with investors. As a result, the stock gained in pre-market trading.
Operating revenues came in at $5,384 million, which fell short of the Zacks Consensus Estimate of $5,475.3 million. The figure also decreased 2% year over year due to sluggish freight revenues (down 2%). The downside was due to a 2% decline in business volumes. Bulk of revenues (93.1%) at Union Pacific was derived from freight in the reported quarter.
Operating income in the first quarter increased 1% year over year to $2 billion. Operating ratio (defined as operating expenses as a percentage of revenues) improved to 63.6% from 64.6% a year-ago. Notably, lower the value of the metric the better.
Moreover, Union Pacific bought back 18.1 million shares during the quarter for $3.5 billion. Effective tax rate during the first quarter of 2019 came in at 22.3% compared with 23.4% a year ago.
Segmental Performance
Freight revenues in the Agricultural Products were $1,067 million, down 3% year over year. Revenue carloads declined 7% year over year. However, average revenue per car increased 5%.
Freight revenues in the Energy division were $982 million, down 16% year over year. Also, revenue carloads fell 15% year over year. Moreover, average revenue per car decreased 2% year over year.
Industrial freight revenues totaled $1,410 million, up 5% year over year. Revenue carloads increased 4% year over year. Also, average revenue per car was up 1%.
Freight revenues in the Premium division were $1,551 million, up 3% year over year. Revenue carloads increased 2% year over year. Average revenue per car was flat year over year.
Other revenues improved 6% to $374 million in the first quarter of 2019.
Liquidity
The company exited the quarter with cash and cash equivalents of $1,059 million compared with $1,273 million at the end of 2018. Debt (due after one year) came in at $23,409 million at the end of the quarter compared with $20,925 million at the end of 2018. Debt-to-EBITDA ratio (on an adjusted basis) increased to 2.6 from 2.3 at 2018-end.
Zacks Rank & A Key Pick
Union Pacific carries a Zacks Rank #3 (Hold). A better-ranked stock in the Zacks Transportation sector is SkyWest (SKYW - Free Report) with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of SkyWest have gained more than 33% on a year-to-date basis.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Zacks Names "Single Best Pick to Double"
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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United Pacific Corporation (UNP - Free Report) reported better-than-expected earnings in first-quarter 2019 just like fellow railroads CSX Corporation (CSX - Free Report) and Kansas City Southern on Apr 16 and 17, respectively.
Union Pacific’s earnings of $1.93 per share surpassed the Zacks Consensus Estimate by 4 cents. The bottom line also increased 15% on a year-over-year basis primarily due to lower costs. This outperformance on the earnings front seems to have found favor with investors. As a result, the stock gained in pre-market trading.
Operating revenues came in at $5,384 million, which fell short of the Zacks Consensus Estimate of $5,475.3 million. The figure also decreased 2% year over year due to sluggish freight revenues (down 2%). The downside was due to a 2% decline in business volumes. Bulk of revenues (93.1%) at Union Pacific was derived from freight in the reported quarter.
Operating income in the first quarter increased 1% year over year to $2 billion. Operating ratio (defined as operating expenses as a percentage of revenues) improved to 63.6% from 64.6% a year-ago. Notably, lower the value of the metric the better.
Moreover, Union Pacific bought back 18.1 million shares during the quarter for $3.5 billion. Effective tax rate during the first quarter of 2019 came in at 22.3% compared with 23.4% a year ago.
Segmental Performance
Freight revenues in the Agricultural Products were $1,067 million, down 3% year over year. Revenue carloads declined 7% year over year. However, average revenue per car increased 5%.
Freight revenues in the Energy division were $982 million, down 16% year over year. Also, revenue carloads fell 15% year over year. Moreover, average revenue per car decreased 2% year over year.
Industrial freight revenues totaled $1,410 million, up 5% year over year. Revenue carloads increased 4% year over year. Also, average revenue per car was up 1%.
Freight revenues in the Premium division were $1,551 million, up 3% year over year. Revenue carloads increased 2% year over year. Average revenue per car was flat year over year.
Other revenues improved 6% to $374 million in the first quarter of 2019.
Liquidity
The company exited the quarter with cash and cash equivalents of $1,059 million compared with $1,273 million at the end of 2018. Debt (due after one year) came in at $23,409 million at the end of the quarter compared with $20,925 million at the end of 2018. Debt-to-EBITDA ratio (on an adjusted basis) increased to 2.6 from 2.3 at 2018-end.
Zacks Rank & A Key Pick
Union Pacific carries a Zacks Rank #3 (Hold). A better-ranked stock in the Zacks Transportation sector is SkyWest (SKYW - Free Report) with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of SkyWest have gained more than 33% on a year-to-date basis.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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