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Union Pacific (UNP) Q1 Earnings Beat Estimates, Rise Y/Y
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Union Pacific Corporation’s(UNP - Free Report) first-quarter 2023 earnings of $2.67 per share handily surpassed the Zacks Consensus Estimate of $2.57. Moreover, the bottom line moved up 3.9% on a year-over-year basis.
Operating revenues of $6,056 million missed the Zacks Consensus Estimate of $6,072.6 million. However, the top line climbed 3.3% on a year-over-year basis, driven by higher fuel surcharge revenues and core pricing gains.
Freight revenues, accounted for 93.4% of the top line, increased 4% to $5,656 million. Business volumes, measured by total revenue carloads, were down 1%.
Union Pacific Corporation Price, Consensus and EPS Surprise
Operating income in the first quarter declined 3% year over year to $2.3 billion.
Total operating expenses rose 8% to $3,762 million, with fuel expenses increasing 7%. Expenses on purchased services and materials increased 16%. Compensation and benefits climbed 7% year over year. The other cost items grew 6% year over year.
The operating ratio (operating expenses as a percentage of revenues) deteriorated by 270 basis points to 62.1%. Falling fuel prices in the quarter, however, positively impacted the operating ratio by 190 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,897 million, up 4% year over year. Segmental business volumes declined 3% year over year.
Industrial freight revenues totaled $2,017 million, up 5% year over year. Segmental business volumes were flat year over year.
Freight revenues in the Premium division were $1,742 million, up 3% year over year. Segmental business volumes increased 5% year over year. Other revenues decreased 5% to $400 million in the first quarter.
Liquidity & Buyback
Union Pacific exited first-quarter 2023 with cash and cash equivalents of $1,079 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,192 million at the first-quarter end from $31,648 million at 2022 end.
In the reported quarter, Union Pacific repurchased 2.9 million shares at an aggregate cost of $0.6 billion.
For 2023, management expects the operating ratio to improve. Carloads for 2023 are expected to exceed industrial production. Capital expenditure is expected to be $3.6 billion (or less than 15% of revenues).
The company expects a dividend payout of 45% (of earnings) in the long term. The excess cash will be used for its share buyback program.
Q1 performance of Some Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) first-quarter 2023 earnings of $1.89 per share missed the Zacks Consensus Estimate of $2.04 and declined 17.5% year over year.
JBHT’s total operating revenues of $3,229.58 million lagged the Zacks Consensus Estimate of $3,434.4 million and fell 7.4% year over year. A decline of 25%, 5% and 17% in the volumes of Integrated Capacity Solutions (ICS), Intermodal (JBI) and Final Mile Services (FMS), respectively, resulted in this downfall. Also, a 17% decline in revenue per load in Truckload (JBT) added to the woes. Declining revenue in ICS, JBI, FMS and JBT were partially offset by Dedicated Contract Services revenue growth of 13%. JBHT’s total operating revenues, excluding fuel surcharges, decreased 10.2% year over year.
Delta Air Lines’ (DAL - Free Report) first-quarter 2023 earnings (excluding 82 cents from non-recurring items) of 25 cents per share missed the Zacks Consensus Estimate of 29 cents. Volatile fuel price and unfavorable weather conditions led to the downtick. DAL reported a loss of $1.23 per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant back then.
DAL reported revenues of $12,759 million, which missed the Zacks Consensus Estimate of $12,767.4 million. However, driven by higher air-travel demand, total revenues increased 36.49% on a year-over-year basis.
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Union Pacific (UNP) Q1 Earnings Beat Estimates, Rise Y/Y
Union Pacific Corporation’s (UNP - Free Report) first-quarter 2023 earnings of $2.67 per share handily surpassed the Zacks Consensus Estimate of $2.57. Moreover, the bottom line moved up 3.9% on a year-over-year basis.
Operating revenues of $6,056 million missed the Zacks Consensus Estimate of $6,072.6 million. However, the top line climbed 3.3% on a year-over-year basis, driven by higher fuel surcharge revenues and core pricing gains.
Freight revenues, accounted for 93.4% of the top line, increased 4% to $5,656 million. Business volumes, measured by total revenue carloads, were down 1%.
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 declined 3% year over year to $2.3 billion.
Total operating expenses rose 8% to $3,762 million, with fuel expenses increasing 7%. Expenses on purchased services and materials increased 16%. Compensation and benefits climbed 7% year over year. The other cost items grew 6% year over year.
The operating ratio (operating expenses as a percentage of revenues) deteriorated by 270 basis points to 62.1%. Falling fuel prices in the quarter, however, positively impacted the operating ratio by 190 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,897 million, up 4% year over year. Segmental business volumes declined 3% year over year.
Industrial freight revenues totaled $2,017 million, up 5% year over year. Segmental business volumes were flat year over year.
Freight revenues in the Premium division were $1,742 million, up 3% year over year. Segmental business volumes increased 5% year over year. Other revenues decreased 5% to $400 million in the first quarter.
Liquidity & Buyback
Union Pacific exited first-quarter 2023 with cash and cash equivalents of $1,079 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,192 million at the first-quarter end from $31,648 million at 2022 end.
In the reported quarter, Union Pacific repurchased 2.9 million shares at an aggregate cost of $0.6 billion.
Currently, Union Pacific carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Unchanged 2023 Outlook
For 2023, management expects the operating ratio to improve. Carloads for 2023 are expected to exceed industrial production. Capital expenditure is expected to be $3.6 billion (or less than 15% of revenues).
The company expects a dividend payout of 45% (of earnings) in the long term. The excess cash will be used for its share buyback program.
Q1 performance of Some Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) first-quarter 2023 earnings of $1.89 per share missed the Zacks Consensus Estimate of $2.04 and declined 17.5% year over year.
JBHT’s total operating revenues of $3,229.58 million lagged the Zacks Consensus Estimate of $3,434.4 million and fell 7.4% year over year. A decline of 25%, 5% and 17% in the volumes of Integrated Capacity Solutions (ICS), Intermodal (JBI) and Final Mile Services (FMS), respectively, resulted in this downfall. Also, a 17% decline in revenue per load in Truckload (JBT) added to the woes. Declining revenue in ICS, JBI, FMS and JBT were partially offset by Dedicated Contract Services revenue growth of 13%. JBHT’s total operating revenues, excluding fuel surcharges, decreased 10.2% year over year.
Delta Air Lines’ (DAL - Free Report) first-quarter 2023 earnings (excluding 82 cents from non-recurring items) of 25 cents per share missed the Zacks Consensus Estimate of 29 cents. Volatile fuel price and unfavorable weather conditions led to the downtick. DAL reported a loss of $1.23 per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant back then.
DAL reported revenues of $12,759 million, which missed the Zacks Consensus Estimate of $12,767.4 million. However, driven by higher air-travel demand, total revenues increased 36.49% on a year-over-year basis.