Union Pacific Corporation Smashes Q4 Earnings, But Revenues Stall

Union Pacific Beats Earnings Estimates

Union Pacific Corporation (UNP) reported fourth-quarter 2023 earnings of $2.71 per share, surpassing the Zacks Consensus Estimate of $2.56. The bottom line improved 1.5% from the previous year.

The operating revenues of $6,159 million also exceeded the Zacks Consensus Estimate of $6,108.7 million, even though the top line remained unchanged from the previous year.

Analysis of Revenue Streams

Freight revenues, contributing 94.2% of the top line, increased by 1% to $5,801 million. Conversely, other revenue streams took a hit, with other revenues declining by 13% to $358 million in the fourth quarter. Business volumes, as measured by total revenue carloads, increased by 3%. The operating income remained steady at $2.4 billion.

Union Pacific’s Financial Strategy

The company managed to keep total operating expenses unchanged at $3,752 million, with fuel expenses taking a significant 11% dip. However, expenses on purchased services and materials increased by 2%. Compensation and benefits remained unchanged, while other cost items grew by 20% year-over-year. The operating ratio improved by 10 basis points to 60.9%.

Segmental Performance Overview

In the Bulk freight category, revenues remained unchanged, while the Industrial freight division showed a 4% increase in revenues. However, the Premium division saw a decline of 3% in freight revenues.

Liquidity and Outlook

The company ended the fourth quarter with cash and cash equivalents of $1,055 million. Additionally, the debt due after a year decreased to $31,156 million at the end of the fourth quarter, compared to $31,648 million at the end of 2022. Capital expenditure is projected to be $3.4 billion for the full year of 2024, and the company does not plan to carry out any share repurchases in the first quarter.

Comparative Company Performance

Other transportation companies such as J.B. Hunt Transport Services, Inc. and Delta Air Lines, Inc. have reported varying performances in their earnings and revenues for the fourth quarter of 2023. It is notable that Union Pacific outperformed J.B. Hunt Transport Services, Inc., whose quarterly earnings fell by 23.4% year-over-year, and the total operating revenues fell by 9.5% year-over-year. On the other hand, Delta Air Lines, Inc. reported a 13.51% decline in earnings but a 5.87% increase in revenues year-over-year.