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Union Pacific Up 7% in a Month: What's Driving the Stock?
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Shares of Union Pacific Corporation (UNP - Free Report) have fared well in a month’s time. The stock has gained 6.8% compared with the industry’s rise of 4.1%.
Reasons for Impressive Price Performance
The Omaha, NE-based company performed impressively in the fourth quarter of 2018 and delivered better-than-expected earnings per share (EPS) and revenues. EPS of $2.12 outpaced the Zacks Consensus Estimate by 6 cents. The bottom line was aided by higher revenues and a lower tax rate as a result of the current tax law. Also, the metric improved significantly on a year-over-year basis.
Operating revenues increased 6% year over year to $5,757 million and beat the Zacks Consensus Estimate of $5,719.3 million. Strong freight revenues, volume growth and higher fuel surcharge revenues boosted top-line results. Impressive performances in the key segments, barring the energy division, contributed to the top line.
Furthermore, the company’s consistent efforts to reward shareholders in the form of dividend payments and share buybacks look encouraging. To this end, Union Pacific recently hiked quarterly dividend by 10% to 88 cents per share. The new rate, sanctioned by the board of directors, will be paid on Mar 29, 2019 to stockholders of record as of Feb 28. Notably, this marks the fourth dividend hike by the company since November 2017.
Moreover, the board has recently approved a new three-year share buyback program to repurchase up to 150 million of its common stock. The plan, which takes effect from Apr 1, 2019 and expires on Mar 31, 2022, replaces the current buyback program that ends on Mar 31, 2019. In fact, these shareholder-friendly moves indicate strong financial condition of the business and the company’s commitment to create value for shareholders. (Read more: Union Pacific Hikes Dividend by 10%, Unveils Buyback Plan)
Additionally, we are positive about the company’s efforts toward promoting safety and enhancing productivity. To this end, the company's progress toward installing positive train control on its network is commendable. The Unified Plan 2020 program, which focuses on improving service reliability and network efficiency apart from promoting safety, is expected to be fully implemented by mid-2019.
Bullish Readings & Zacks Rank
The positivity around this Zacks Rank #2 (Buy) stock can be gauged from the Zacks Consensus Estimate being revised 2.6% upward in the past 30 days for current-quarter earnings. The company also has an impressive Growth Score of B.
The company’s ROE of 28% compares favorably with the industry’s 23.9%, which indicates its capability to use shareholders’ funds efficiently.
Shares of Azul and Air France have improved 63.4% and 18.3% in the past six months, respectively. Meanwhile, Frontline outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 69%.
Zacks' Best Stock-Picking Strategy
It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.
How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.
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Union Pacific Up 7% in a Month: What's Driving the Stock?
Shares of Union Pacific Corporation (UNP - Free Report) have fared well in a month’s time. The stock has gained 6.8% compared with the industry’s rise of 4.1%.
Reasons for Impressive Price Performance
The Omaha, NE-based company performed impressively in the fourth quarter of 2018 and delivered better-than-expected earnings per share (EPS) and revenues. EPS of $2.12 outpaced the Zacks Consensus Estimate by 6 cents. The bottom line was aided by higher revenues and a lower tax rate as a result of the current tax law. Also, the metric improved significantly on a year-over-year basis.
Operating revenues increased 6% year over year to $5,757 million and beat the Zacks Consensus Estimate of $5,719.3 million. Strong freight revenues, volume growth and higher fuel surcharge revenues boosted top-line results. Impressive performances in the key segments, barring the energy division, contributed to the top line.
Furthermore, the company’s consistent efforts to reward shareholders in the form of dividend payments and share buybacks look encouraging. To this end, Union Pacific recently hiked quarterly dividend by 10% to 88 cents per share. The new rate, sanctioned by the board of directors, will be paid on Mar 29, 2019 to stockholders of record as of Feb 28. Notably, this marks the fourth dividend hike by the company since November 2017.
Moreover, the board has recently approved a new three-year share buyback program to repurchase up to 150 million of its common stock. The plan, which takes effect from Apr 1, 2019 and expires on Mar 31, 2022, replaces the current buyback program that ends on Mar 31, 2019. In fact, these shareholder-friendly moves indicate strong financial condition of the business and the company’s commitment to create value for shareholders. (Read more: Union Pacific Hikes Dividend by 10%, Unveils Buyback Plan)
Additionally, we are positive about the company’s efforts toward promoting safety and enhancing productivity. To this end, the company's progress toward installing positive train control on its network is commendable. The Unified Plan 2020 program, which focuses on improving service reliability and network efficiency apart from promoting safety, is expected to be fully implemented by mid-2019.
Bullish Readings & Zacks Rank
The positivity around this Zacks Rank #2 (Buy) stock can be gauged from the Zacks Consensus Estimate being revised 2.6% upward in the past 30 days for current-quarter earnings. The company also has an impressive Growth Score of B.
The company’s ROE of 28% compares favorably with the industry’s 23.9%, which indicates its capability to use shareholders’ funds efficiently.
Other Stocks to Consider
Investors interested in the Zacks Transportation Sector may consider Azul S.A. (AZUL - Free Report) , Air France-KLM SA (AFLYY - Free Report) and Frontline Ltd. (FRO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Azul and Air France have improved 63.4% and 18.3% in the past six months, respectively. Meanwhile, Frontline outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 69%.
Zacks' Best Stock-Picking Strategy
It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.
How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.
Free – See the Stocks It Turned Up for Today >>