United Pacific Corporation’s (UNP - Free Report) second-quarter 2019 earnings of $2.22 per share surpassed the Zacks Consensus Estimate by 10 cents. The bottom line also increased 12.1% on a year-over-year basis primarily due to lower costs. This outperformance on the earnings front seems to have found favor with investors. As a result, the stock gained in pre-market trading.
Operating revenues came in at $5,596 million, which edged past the Zacks Consensus Estimate of $5,576.7 million. The figure, however, decreased 1.3% year over year due to sluggish freight revenues (down 2%). The year over year decline was due to a 4% reduction in business volumes, measured by total revenue carloads. Notably, bulk of revenues (93.6%) at Union Pacific was derived from freight in the reported quarter.
Operating income in the second quarter increased 8% year over year to $2.3 billion. Operating expenses declined 7% to $3.3 billion. Operating ratio (defined as operating expenses as a percentage of revenues) improved to 59.6% from 63% a year-ago driven by this railroad operator’s efforts to control costs. Notably, lower the value of the metric the better.
Moreover, this Zacks Rank #4 (Sell) company bought back 3.7 million shares during the quarter for $639 million. Effective tax rate during the second quarter of 2019 came in at 23.7% compared with 22.1% a year ago.
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