By Sam Boughedda
Union Pacific (NYSE:UNP) missed fourth-quarter earnings and revenue expectations on Tuesday as extreme winter weather impacted its network in December.
The transport firm reported earnings of $2.67 per share on revenue of $6.2 billion. Analysts expected earnings to come in at $2.78 per share on revenue of $6.31B.
The company said it continued to face challenges in hiring craft professionals in critical locations and experienced the impact of extreme winter weather on its network in December.
This resulted in revenue growth being "more than offset" by elevated operating expenses due to operational inefficiencies and a higher inflationary environment.
Union Pacific shares are down over 3% at the time of writing.
Following the release, Deutsche Bank analysts said in a note that "UNP's 4Q results came in a bit below expectations - underlying operating profits missed Consensus by 3%. Total revenue growth was 8%, almost entirely driven by fuel (price/mix combined was a bit negative year on year)."
"We were hopeful for a little better, but the numbers don't appear to be out of line with the company's own plans. The bottom line is 2022 was a forgetful year for UNP execution, and we are hopeful for a better 2023," added the analysts.
In addition, Wolfe Research analysts told investors in a note that UNP "missed across the board."
"UNP reported 4Q EPS of $2.67 vs. Consensus of $2.77 and our estimate of $2.84. Revenue increased 7.8% y/y, 180bp light of our model, while UNP's OR of 61.0% was 360bp worse y/y and 40bp worse than our model. So, operating income missed our model by 3%. Below the line, a higher tax rate was a $0.05 drag vs. our model," the analysts explained.