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Union Pacific (UNP) Q3 Earnings Beat, Revenues Fall Y/Y
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Union Pacific Corporation’s (UNP - Free Report) third-quarter 2023 earnings of $2.51 per share beat the Zacks Consensus Estimate of $2.45. However, the bottom line plunged 21.3% on a year-over-year basis.
Operating revenues of $5,941 million missed the Zacks Consensus Estimate of $6,002 million. The top line tumbled 9.5% on a year-over-year basis due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix.
Freight revenues, accounted for 93.3% of the top line, decreased 9% to $5,545 million. The metric fell short of our projection of $5,804 million. Other revenues declined 13% to $396 million in the third quarter but beat our expectation of $370.5 million. Business volumes, measured by total revenue carloads, were down 3%.
Operating income dipped 17% year over year to $2.2 billion.
Total operating expenses of $3,764 million decreased 4% year over year. Fuel expenses plunged 25%. Expenses on purchased services and materials rose 7%.
Union Pacific Corporation Price, Consensus and EPS Surprise
Compensation and benefits were down 6% year over year. Other cost items grew 18% year over year.
The operating ratio (operating expenses as a percentage of revenues) deteriorated by 350 basis points year over year to 63.4%. Rising fuel prices during the quarter negatively impacted the operating ratio by 170 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,766 million, down 10% year over year. The actual percentage decline was greater than our anticipation of a 5.2% year-over-year fall. Segmental revenue carloads decreased 4% year over year. Industrial freight revenues totaled $2,057 million, down 6% year over year. We estimated a 1.3% improvement from third-quarter 2022 actuals. Segmental revenue carloads have been kept unchanged from the past year.
Freight revenues in the Premium division were $1,722 million, down 12% year over year. The actual percentage decline was marginally greater than our expectation on a year-over-year basis. Segmental revenue carloads fell 4% year over year.
Liquidity & Buyback
Union Pacific exited third-quarter 2023 with cash and cash equivalents of $750 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,153 million at third-quarter end from $31,648 million at 2022 end.
Capital expenditure is now projected to be $3.7 billion (prior view: $3.6 billion). Management also expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Q3 Performance of Some Other Transportation Companies
United Airlines (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year.
Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand.
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
Total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year.
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Union Pacific (UNP) Q3 Earnings Beat, Revenues Fall Y/Y
Union Pacific Corporation’s (UNP - Free Report) third-quarter 2023 earnings of $2.51 per share beat the Zacks Consensus Estimate of $2.45. However, the bottom line plunged 21.3% on a year-over-year basis.
Operating revenues of $5,941 million missed the Zacks Consensus Estimate of $6,002 million. The top line tumbled 9.5% on a year-over-year basis due to reduced fuel surcharge revenues, lower volumes and an unfavorable business mix.
Freight revenues, accounted for 93.3% of the top line, decreased 9% to $5,545 million. The metric fell short of our projection of $5,804 million. Other revenues declined 13% to $396 million in the third quarter but beat our expectation of $370.5 million. Business volumes, measured by total revenue carloads, were down 3%.
Operating income dipped 17% year over year to $2.2 billion.
Total operating expenses of $3,764 million decreased 4% year over year. Fuel expenses plunged 25%. Expenses on purchased services and materials rose 7%.
Union Pacific Corporation Price, Consensus and EPS Surprise
Union Pacific Corporation price-consensus-eps-surprise-chart | Union Pacific Corporation Quote
Compensation and benefits were down 6% year over year. Other cost items grew 18% year over year.
The operating ratio (operating expenses as a percentage of revenues) deteriorated by 350 basis points year over year to 63.4%. Rising fuel prices during the quarter negatively impacted the operating ratio by 170 basis points.
Segmental Performance
Bulk (Grain & grain products, Fertilizer, Food & refrigerated, Coal & renewables) freight revenues were $1,766 million, down 10% year over year. The actual percentage decline was greater than our anticipation of a 5.2% year-over-year fall. Segmental revenue carloads decreased 4% year over year.
Industrial freight revenues totaled $2,057 million, down 6% year over year. We estimated a 1.3% improvement from third-quarter 2022 actuals. Segmental revenue carloads have been kept unchanged from the past year.
Freight revenues in the Premium division were $1,722 million, down 12% year over year. The actual percentage decline was marginally greater than our expectation on a year-over-year basis. Segmental revenue carloads fell 4% year over year.
Liquidity & Buyback
Union Pacific exited third-quarter 2023 with cash and cash equivalents of $750 million compared with $973 million at the end of 2022. Debt (due after a year) decreased to $31,153 million at third-quarter end from $31,648 million at 2022 end.
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.
2023 Outlook
Capital expenditure is now projected to be $3.7 billion (prior view: $3.6 billion).
Management also expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Q3 Performance of Some Other Transportation Companies
United Airlines (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year.
Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand.
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
Total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year.