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Union Pacific (UNP) Q1 Earnings Miss Estimates, Down Y/Y

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Union Pacific Corporation’s (UNP - Free Report) first-quarter 2021 earnings of $2.00 per share missed the Zacks Consensus Estimate of $2.06. Moreover, the bottom line declined 7% on a year-over-year basis.

Operating revenues of $5,001 million also missed the Zacks Consensus Estimate of $5,036.1 million. Moreover, the top line dropped 4.4% on a year-over-year basis due to the reduction in freight revenues (down 5% to $4,649 million). This reflects deteriorating freight conditions in the United States. Moreover, business volumes, measured by total revenue carloads, decreased 1% year over year driven by declines in industrial and bulk shipments.

Union Pacific Corporation Price, Consensus and EPS Surprise

 

Union Pacific Corporation Price, Consensus and EPS Surprise

Union Pacific Corporation price-consensus-eps-surprise-chart | Union Pacific Corporation Quote

 

Operating income in the first quarter slid 7% year over year to $1,993 million. Operating expenses also slipped 3% to $3,008 million. Operating ratio (operating expenses as a percentage of revenues) stood at 60.1% in first-quarter 2021 compared with 59% in the year-ago quarter.  Notably, lower the value of the metric the better. The deterioration in the key metric in first-quarter 2021 was due to adverse weather conditions in February and rising fuel prices. Notably adverse weather conditions and rising fuel prices hurt the metric to the tune of 1.6 points and 1 point, respectively.

Moreover, this currently Zacks Rank #3 (Hold) company’s first-quarter effective tax rate increased to 23.5% from 23.1% in the year-ago quarter. In the first quarter, Union Pacific repurchased 6.7 million shares at an aggregate cost of $1.4 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segmental Performance

Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,512 million, down 1% year over year. Moreover, average revenue per car increased 1% year over year. Meanwhile, revenue carloads declined 2% on a year-over-year basis.

Industrial freight revenues totaled $1,656 million, down 13% year over year. Also, revenue carloads fell 11% and average revenue per car slid 1% on a year-over-year basis.

Freight revenues in the Premium division were $1,481 million, up 2% year over year. Revenue carloads rose 6% year over year. Average revenue per car, however, declined 4%.

Meanwhile, other revenues inched up 1% to $352 million in the first quarter.

Liquidity

The company exited the first quarter of 2021 with cash and cash equivalents of $1,183 million compared with $1,799 million at the end of 2020. Debt (due after a year) declined to $25,117 million at the end of the quarter from $25,660 million at 2020-end. Debt-to-EBITDA ratio (on an adjusted basis) is kept in line with December 2020 end figures at 2.9.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) , J.B. Hunt Transport Services (JBHT - Free Report) and Kansas City Southern (KSU - Free Report) recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #3, incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share. The figure was wider than the Zacks Consensus Estimate of a loss of $3.08. Meanwhile, total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3 ranked player, reported earnings of $1.37 per share. The figure beat the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

Kansas City Southern, carrying a Zacks Rank of 3, reported earnings (excluding 23 cents from non-recurring items) of $1.91 per share. The figure missed the Zacks Consensus Estimate of $2. Moreover, quarterly revenues of $706 million lagged the Zacks Consensus Estimate of $714.3 million.

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