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UPS or UNP: Which Transportation Stock Holds an Edge Post Q1 Earnings?
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Key Takeaways
UNP posted Q1 revenues of $6.22B ( 3.2% y/y) and adjusted EPS of $2.93, both topping estimates.
UPS beat Q1 estimates, but revenues fell 1.6% y/y and adjusted EPS dropped 28.2%; shares slid post results.
UPS warned that war-driven fuel prices could hurt demand. 2026 U.S. Domestic revenues and margin seen flat.
Both Union Pacific (UNP - Free Report) and United Parcel Service (UPS - Free Report) delivered better-than-expected first-quarter 2026 results, but the quality and trajectory of growth diverged meaningfully.
UNP reported revenues of $6.22 billion, up 3.2% year over year, marginally beating the Zacks Consensus Estimate. Quarterly earnings (excluding 6 cents from non-recurring items) of $2.93 per share beat the Zacks Consensus Estimate by 2.8% and increased 8.5% on a year-over-year basis.
UPS’ quarterly earnings per share (excluding 5 cents from non-recurring items) of $1.07 beat the Zacks Consensus Estimate of $1.04 but declined 28.2% year over year. Revenues of $21.2 billion surpassed the Zacks Consensus Estimate of $21 billion but decreased 1.6% year over year.
Given this backdrop, let’s take a closer look at how UNP and UPS are placed now and which stock appears to be the smarter pick currently.
The Case for UNP
The year-over-year increase in Union Pacific’s operating revenues in the March quarter was driven by core pricing gains, fuel surcharge revenues and business mix despite carrying less freight than a year ago.
Freight revenues increased 4%. Excluding fuel surcharge, the metric grew 3%. The company's adjusted operating ratio (operating expenses as a % of revenues) improved 80 basis points from a year ago to 59.9%. Overall volume declined 1% in the March quarter, mainly due to a 9% slump in premium traffic, which includes intermodal and automotive business.
Locomotive productivity increased 6% to 144 gross ton-miles per horsepower day. Fuel consumption rate improved 4% to 1.064. Workforce productivity increased 7% to 1,163 car miles per employee. The railroad also excelled in terms of safety, with train accidents and employee injury rates improving.
The recovery in the freight scenario is a huge positive for railroads like Union Pacific. Highlighting improving freight demand, the Cass Freight Shipments Index gained 3% month-to-month in March 2026. At Union Pacific, freight revenues account for most (94.8% in the first quarter of 2026) of the top line.
The company reaffirmed its 2026 outlook. With respect to earnings per share, the railroad still expects to attain the three-year CAGR target of high-single digit to low-double digit growth through 2027. UNP further anticipates operating ratio improvement. Capital expenditure is expected to be approximately $3.3 billion. The company aims to continue generating strong cash while increasing annual dividend payouts.
The earnings beat by UNP in the first quarter of 2026 was its third bottom-line outperformance in the last four quarters. The railroad operator’s earnings missed the Zacks Consensus Estimate in the other quarter. The average beat is 2.3%.
The Case for UPS
Despite reporting better-than-expected earnings and revenues in the first quarter of 2026, UPS’ shares fell after the results on April 28. The decline was primarily due to management’s warning that elevated fuel prices due to the Iran war could eventually hurt demand.
For the second quarter of 2026, UPS expects the U.S. Domestic segment’s revenues to be up low single digits and operating margin to be between 7.5% and 8.5%. Revenue growth in the International segment for the June quarter is anticipated in the low single digits year over year, driven by a solid increase in revenue per piece. Operating margin in the International segment is expected in the 13-14% band. In the Supply Chain Solutions segment, second-quarter revenues are expected to be up low single digits year over year and operating margin between 9.5% and 10.5%.
For the full-year 2026, UPS expects the U.S. Domestic segment’s revenues as well as adjusted operating margin to be flat year over year. Revenue growth in the International segment for 2026 is anticipated in the low single digits year over year. Operating margin in the International segment is expected to be in the mid-teens. In the Supply Chain Solutions segment, full-year revenues are expected to be up in the high single digits, which includes revenues from UPS’ Andlauer acquisition and operating margin in the low double digits.
The parcel delivery company still expects consolidated revenues of approximately $89.7 billion. Adjusted operating margin is still expected to be around 9.6%. Capital expenditures are estimated to be around $3 billion, with dividend payments expected to be around $5.4 billion (subject to board approval). The effective tax rate is expected to be around 23%.
The earnings beat by UPS in the first quarter of 2026 was its third bottom-line outperformance in the last four quarters. The company’s earnings missed the Zacks Consensus Estimate in the other quarter. The average beat is 10.6%.
Shares of UNP have gained in double digits over the past six months. UPS’ shares have not performed well compared with UNP, gaining in the single digits in the same time frame.
6-Month Price Comparison
Image Source: Zacks Investment Research
UPS trades at a forward price-to-sales ratio of 6.07x compared with UPS’ 0.98x. Consequently, UNP shares appear to be more expensive. UNP currently carries a Value Score of D, while UPS holds a Value Score of B.
See how the Zacks Consensus Estimate for UNP and UPS earnings has been revised over the past 90 days.
Earnings Estimate Revisions for UNP
Image Source: Zacks Investment Research
Earnings Estimate Revisions for UPS
Image Source: Zacks Investment Research
End Note
Union Pacific’s cost-cutting efforts, improving freight demand scenario and shareholder-friendly approach justify its premium valuation. While United Parcel Service'slong-term promise remains intact, its near-term outlook remains somewhat uneven.
While UPS is largely supported by increased focus on healthcare revenues and efficiencies driven by artificial intelligence, we note that the strategy shift by the shipping giant has resulted in a significant drop in average daily volumes in the first quarter of 2026.
Owing to the strategic shift, UPS has not increased the quarterly dividend this year, freezing it at $1.64 per quarter ($6.56 annually). UNP’s stronger share price performance also indicates that its cost-cutting efforts are translating into tangible benefits. Based on our analysis, UNP appears to be the more attractive option at present, even though both stocks currently carry a Zacks Rank #3 (Hold).
View the Zacks #1 Rank List
Image: Bigstock
UPS or UNP: Which Transportation Stock Holds an Edge Post Q1 Earnings?
Key Takeaways
Both Union Pacific (UNP - Free Report) and United Parcel Service (UPS - Free Report) delivered better-than-expected first-quarter 2026 results, but the quality and trajectory of growth diverged meaningfully.
UNP reported revenues of $6.22 billion, up 3.2% year over year, marginally beating the Zacks Consensus Estimate. Quarterly earnings (excluding 6 cents from non-recurring items) of $2.93 per share beat the Zacks Consensus Estimate by 2.8% and increased 8.5% on a year-over-year basis.
UPS’ quarterly earnings per share (excluding 5 cents from non-recurring items) of $1.07 beat the Zacks Consensus Estimate of $1.04 but declined 28.2% year over year. Revenues of $21.2 billion surpassed the Zacks Consensus Estimate of $21 billion but decreased 1.6% year over year.
Given this backdrop, let’s take a closer look at how UNP and UPS are placed now and which stock appears to be the smarter pick currently.
The Case for UNP
The year-over-year increase in Union Pacific’s operating revenues in the March quarter was driven by core pricing gains, fuel surcharge revenues and business mix despite carrying less freight than a year ago.
Freight revenues increased 4%. Excluding fuel surcharge, the metric grew 3%. The company's adjusted operating ratio (operating expenses as a % of revenues) improved 80 basis points from a year ago to 59.9%. Overall volume declined 1% in the March quarter, mainly due to a 9% slump in premium traffic, which includes intermodal and automotive business.
Locomotive productivity increased 6% to 144 gross ton-miles per horsepower day. Fuel consumption rate improved 4% to 1.064. Workforce productivity increased 7% to 1,163 car miles per employee. The railroad also excelled in terms of safety, with train accidents and employee injury rates improving.
The recovery in the freight scenario is a huge positive for railroads like Union Pacific. Highlighting improving freight demand, the Cass Freight Shipments Index gained 3% month-to-month in March 2026. At Union Pacific, freight revenues account for most (94.8% in the first quarter of 2026) of the top line.
The company reaffirmed its 2026 outlook. With respect to earnings per share, the railroad still expects to attain the three-year CAGR target of high-single digit to low-double digit growth through 2027. UNP further anticipates operating ratio improvement. Capital expenditure is expected to be approximately $3.3 billion. The company aims to continue generating strong cash while increasing annual dividend payouts.
The earnings beat by UNP in the first quarter of 2026 was its third bottom-line outperformance in the last four quarters. The railroad operator’s earnings missed the Zacks Consensus Estimate in the other quarter. The average beat is 2.3%.
The Case for UPS
Despite reporting better-than-expected earnings and revenues in the first quarter of 2026, UPS’ shares fell after the results on April 28. The decline was primarily due to management’s warning that elevated fuel prices due to the Iran war could eventually hurt demand.
For the second quarter of 2026, UPS expects the U.S. Domestic segment’s revenues to be up low single digits and operating margin to be between 7.5% and 8.5%. Revenue growth in the International segment for the June quarter is anticipated in the low single digits year over year, driven by a solid increase in revenue per piece. Operating margin in the International segment is expected in the 13-14% band. In the Supply Chain Solutions segment, second-quarter revenues are expected to be up low single digits year over year and operating margin between 9.5% and 10.5%.
For the full-year 2026, UPS expects the U.S. Domestic segment’s revenues as well as adjusted operating margin to be flat year over year. Revenue growth in the International segment for 2026 is anticipated in the low single digits year over year. Operating margin in the International segment is expected to be in the mid-teens. In the Supply Chain Solutions segment, full-year revenues are expected to be up in the high single digits, which includes revenues from UPS’ Andlauer acquisition and operating margin in the low double digits.
The parcel delivery company still expects consolidated revenues of approximately $89.7 billion. Adjusted operating margin is still expected to be around 9.6%. Capital expenditures are estimated to be around $3 billion, with dividend payments expected to be around $5.4 billion (subject to board approval). The effective tax rate is expected to be around 23%.
The earnings beat by UPS in the first quarter of 2026 was its third bottom-line outperformance in the last four quarters. The company’s earnings missed the Zacks Consensus Estimate in the other quarter. The average beat is 10.6%.
UPS & UNP’s Price Performance, Valuation & Earnings Estimates
Shares of UNP have gained in double digits over the past six months. UPS’ shares have not performed well compared with UNP, gaining in the single digits in the same time frame.
6-Month Price Comparison
UPS trades at a forward price-to-sales ratio of 6.07x compared with UPS’ 0.98x. Consequently, UNP shares appear to be more expensive. UNP currently carries a Value Score of D, while UPS holds a Value Score of B.
See how the Zacks Consensus Estimate for UNP and UPS earnings has been revised over the past 90 days.
Earnings Estimate Revisions for UNP
Earnings Estimate Revisions for UPS
End Note
Union Pacific’s cost-cutting efforts, improving freight demand scenario and shareholder-friendly approach justify its premium valuation. While United Parcel Service's long-term promise remains intact, its near-term outlook remains somewhat uneven.
While UPS is largely supported by increased focus on healthcare revenues and efficiencies driven by artificial intelligence, we note that the strategy shift by the shipping giant has resulted in a significant drop in average daily volumes in the first quarter of 2026.
Owing to the strategic shift, UPS has not increased the quarterly dividend this year, freezing it at $1.64 per quarter ($6.56 annually). UNP’s stronger share price performance also indicates that its cost-cutting efforts are translating into tangible benefits. Based on our analysis, UNP appears to be the more attractive option at present, even though both stocks currently carry a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.