Union Pacific Corporation (UNP) Up On Q1 Earnings Beat

Union Pacific Corporation's (NYSE:UNP) first quarter 2017 earnings of $1.32 beat the Zacks Consensus Estimate of $1.23 per share. The bottom-line expanded 13.8% on a year-over-year basis.

Results were aided by higher revenues. The earnings beat pleased the investors. As a result, the stock gained in early trading.

Operating revenues of $5,132 million beat the Zacks Consensus Estimate of $4,997.7 million. Revenues increased 6.3% on a year over year basis. The bulk of revenues (93.4%) at Union Pacific are derived from freight in the reported quarter.

Freight revenues increased 6%, thereby boosting the top line. Freight revenues increased due to volume growth, increased fuel surcharge revenues among other factors.

Operating income in the first quarter climbed 6% year over year to $1.8 billion. Operating ratio (defined as operating expenses as a percentage of revenues) came in at 65.1%, flat year-over-year. During the quarter, the company bought back 7.5 million shares for $802 million.

Segment Details

Agricultural Products freight revenues were $942 million, up 7% year over year. Business volumes increased 6% year over year, while average revenue per car climbed 1%.

Automotive accounted for $504 million of freight revenues, down 1% year over year. Business volumes were down 2% and average revenue per car climbed 1% year over year.

Chemicals contributed $885 million to freight revenues, up 1% year over year. Volumes were down 4%, while average revenue per car improved 5%.

Coal revenues (freight) increased 25% year over year to $648 million. Volumes grew 16% and average revenue per car improved 8% year over year.

Industrial Products generated freight revenues of $907 million, up 9% year over year on an 1% volume growth. Average revenue per car was up 7%.

Intermodal segment freight revenues came in at $908 million, up 3% year over year. Volumes were flat while average revenue per car improved 3%.

Other revenues improved 3% to $338 million in the first quarter of 2017.

Liquidity

Union Pacific exited the quarter with cash and cash equivalents of $1,049 million, compared with $1,277 million at the end of 2016. Debt (due after 1 year) came in at $14, 310 million at the end of the quarter compared with $14,249 million at the end of 2016. Adjusted debt-to-capitalization ratio increased to 47.4% from 47.3% at 2016-end.

Other Key Releases Coming Up

Investors interested in the broader transportation space keenly await the first-quarter earnings reports of Spirit Airlines (NASDAQ:SAVE) , Copa Holdings (NYSE:CPA) and Air Lease Corp. (NYSE:AL) that are slated to be released on Apr 28, May 10 and May 4, respectively.

Zacks Rank

Union Pacific currently carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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