Union Pacific Chugs Along

Shares of Union Pacific Corp. (NYSE: UNP) are up about 18% over the past 12 months, trailing only Canadian Pacific Railway Ltd. (NYSE: CP), up 21%, and Kansas City Southern (NYSE: KSU), up 20%. Norfolk Southern Corp. (NYSE: NSC) is flat for the year, and only CSX Corp. (NYSE: CSX) has posted a drop.

Union Pacific this morning reported second-quarter results that include earnings of $2.01 per share and revenue of $5.22 billion. The consensus estimates called for earnings per share (EPS) of $1.97 on revenue of $5.23 billion. Both EPS and revenue were all-time highs for the company.

The strength of railroad stocks is a little surprising given their dependence on hauling coal and the well-known lack of demand both for coal and for shipping the stuff. Where Union Pacific made up the slack in coal shipments was in its auto, chemicals, intermodal (container) and industrial products shipments. Coal and grain shipments fell.

The railroad also reported that diesel fuel prices fell 2% and that the company’s ratio of operating costs to revenue fell to 67%, another all-time best for Union Pacific. Regarding the rest of the year, Union Pacific’s CEO had this comment:

Looking ahead to the second half of the year, the global economic outlook has become more uncertain and coal volumes remain a challenge.

Shares of Union Pacific were up about 4% at $123.25 in early trading this morning. The 52-week range was $77.73 to $119.94.

Paul Ausick