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Union Pacific (UNP) Q4 Earnings & Revenues Beat, Rise Y/Y

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Union Pacific Corporation (UNP - Free Report) reported better-than-expected fourth-quarter 2021 results.

Earnings of $2.66 per share surpassed the Zacks Consensus Estimate of $2.60. Moreover, the bottom line increased 12.7% on a year-over-year basis.

Operating revenues of $5,733 million also beat the Zacks Consensus Estimate of $5,546.8 million. The top line climbed 11.5% on a year-over-year basis due to an uptick in freight revenues (up 10% to $5,297 million). Freight revenues were boosted by a positive business mix and pricing gains. Business volumes, measured by total revenue carloads, were down 4% compared with the fourth-quarter 2020 level, thanks to supply chain disruptions.

Operating income in the fourth quarter surged 22% year over year to $2,440 million. Total operating expenses rose 5% to $3,293 million due to escalating fuel prices. Operating ratio (operating expenses as a percentage of revenues) improved to 57.4% compared with 61% in the year-ago quarter, despite being hurt to the tune of 100 basis points by higher fuel prices.  Notably, lower the value of the metric, the better. For 2022, Union Pacific expects operating ratio to be 55.5%.

This Zacks Rank #3 (Hold) company’s fourth-quarter effective tax rate rose to 23.2% from 23% in the year-ago quarter. In the fourth quarter, Union Pacific repurchased 5.8 million shares at an aggregate cost of $1.4 billion.

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

Segmental Performance

Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,809 million, up 16% year over year. Revenue carloads and average revenue per car increased 5% and 10%, respectively, on a year-over-year basis.
 
Industrial freight revenues totaled $1,897 million, up 14% year over year. Both revenue carloads and average revenue per car surged 8% and 6%, respectively, on a year-over-year basis.

Freight revenues in the Premium division were $1,591 million, up 1% year over year. Revenue carloads fell 14%, while average revenue per car increased 17% on a year-over-year basis.

Meanwhile, other revenues increased 29% to $436 million in the fourth quarter.

Liquidity

Union Pacific exited the fourth quarter of 2021 with cash and cash equivalents of $960 million compared with $1,799 million at the end of 2020. Debt (due after a year) increased to $27,563 million at the end of the quarter from $25,660 million at 2020-end. Debt-to-EBITDA ratio (on an adjusted basis) is at 2.7 compared with the December 2020-end figure of 2.9.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines (DAL - Free Report) , J.B. Hunt Transport Services (JBHT - Free Report) and United Airlines (UAL - Free Report) recently reported fourth-quarter 2021 results.

Delta, carrying a Zacks Rank #4 (Sell), reported fourth-quarter 2021 earnings (excluding 86 cents from non-recurring items) of 22 cents per share, outpacing the Zacks Consensus Estimate of 15 cents. Results came against the year-ago quarter’s loss of $2.53 per share. Strong holiday travel demand and favorable pricing aided the December quarter’s results.

Delta’s revenues came in at $9,470 million, which not only beat the Zacks Consensus Estimate of $9,232.1 million, but also soared in excess of 100% from the year-ago figure as people resorted to air travel during the holidays.

J.B. Hunt Transport Services, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 earnings of $2.28 per share, surpassing the Zacks Consensus Estimate of $1.99. The bottom line surged 58.3% year over year on the back of higher revenues across all segments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

J.B. Hunt’s operating revenues of $3,497 million also outperformed the Zacks Consensus Estimate of $3,287.8 million. The top line jumped 27.7% year over year. Total operating revenues, excluding fuel surcharges, rose 21.7% year over year.

United Airlines, carrying a Zacks Rank #4, incurred a loss (excluding 39 cents from non-recurring items) of $1.60 per share in the fourth quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $2.23. The amount of loss narrowed by 77.1% year over year.

United Airlines’ operating revenues of $8,192 million also outperformed the Zacks Consensus Estimate of $7,930.9 million. The top line surged more than 100% year over year, with passenger revenues, accounting for 84% of the top line, soaring 185.4% to $6,878 million.