Union Pacific Falls on Sliding Freight Revenues

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When Union Pacific Corp. (NYSE: UNP) released its third-quarter earnings report before the markets opened on Thursday, it said that it had $1.36 in earnings per share (EPS) and $5.2 billion in revenue. The consensus estimates from Thomson Reuters had called for $1.39 in EPS and revenue of $5.18 billion. In the third quarter of the previous year, it reported EPS of $1.50 and $5.56 billion in revenue.

In terms of the outlook for the year, the company believes that the macroeconomic environment still has some challenges in the form of an unstable global economy, the relatively strong U.S. dollar and continued soft demand for consumer goods. However, certain segments of the economy, such as grain and energy, are showing signs of life.

Closing out 2016 and heading into next year, Union Pacific is optimistic about the opportunities that lie ahead. In the coming months it will continue to do what Union Pacific does best: operate a safe, efficient and productive network while providing an excellent customer experience and delivering solid shareholder returns.

In terms of the freight revenues for the third quarter, the company reported:

  • Agricultural Products up 6% to $937 million
  • Chemicals down 1% to $875 million
  • Automotive down 8% to $485 million
  • Intermodal down 9% to $855 million
  • Industrial Products down 13% to $855 million
  • Coal down 19% to $728 million

Lance Fritz, Union Pacific’s board chair, president and chief executive, commented:

Continued momentum from our productivity initiatives, as well as positive core pricing, helped partially offset the decline in total carload volumes.  While many of the same volume challenges have continued throughout the year, we are keeping a laser focus on our six value tracks.  This strategy ensures we provide our customers with an excellent value proposition and service experience, while efficiently and safely managing our resources.

Shares of Union Pacific were trading down 5.5% at $92.74 on Thursday, with a consensus analyst price target of $100.68 and a 52-week trading range of $67.06 to $98.84.

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