Union Pacific's Q4 Earnings Miss Analysts' Estimates Amid Freight Demand Volatility
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
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Source: Newsfilter
- Earnings Shortfall: Union Pacific reported an adjusted profit of $2.86 per share for Q4, slightly below analysts' expectations of $2.87, indicating a strain on profitability amid ongoing macroeconomic pressures.
- Revenue Decline: The company posted total operating revenue of $6.09 billion, falling short of the $6.12 billion estimate, primarily due to volatile freight demand and rising operational costs, reflecting significant industry challenges.
- Weak Freight Performance: Revenue from the intermodal shipments segment, the largest volume driver, was $1.14 billion, down 9% year-over-year, highlighting the direct impact of unstable market demand on business performance.
- Merger Plan Obstacles: Union Pacific's $85 billion bid to acquire Norfolk Southern faces strong opposition from labor unions and regulatory scrutiny, which could hinder future market consolidation strategies and affect operational efficiency.
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Analyst Views on UNP
Wall Street analysts forecast UNP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for UNP is 265.27 USD with a low forecast of 245.00 USD and a high forecast of 289.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
9 Buy
6 Hold
0 Sell
Moderate Buy
Current: 227.710
Low
245.00
Averages
265.27
High
289.00
Current: 227.710
Low
245.00
Averages
265.27
High
289.00
About UNP
Union Pacific Corporation, through its principal operating company, Union Pacific Railroad Company, connects over 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. It maintains coordinated schedules with other rail carriers to move freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. The railroad’s diversified business mix includes bulk, industrial, and premium. Its Bulk shipments consist of grain and grain products, fertilizer, food and refrigerated, and coal and renewables. The Industrial shipments consist of several categories, including construction, industrial chemicals, plastics, forest products, specialized products (primarily waste, salt, and roofing), metals and ores, petroleum, liquid petroleum gases (LPG), soda ash, and sand. Its Premium shipments include finished automobiles, automotive parts, and merchandise in intermodal containers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Union Pacific Reports Record Q4 2025 Earnings Amid Challenges
- Record Performance: Union Pacific reported a net income of $7.1 billion for 2025, reflecting a 6% increase, with earnings per share rising 8% to $11.98, showcasing the company's best-ever performance in safety, service, and operational excellence.
- Revenue Dynamics: Although fourth-quarter freight revenue declined 1% to $5.8 billion, the annual freight revenue set a record with a 3% increase, driven by strong core pricing gains and an additional 113,000 railcars.
- Shareholder Returns: Cash returned to shareholders grew by 25% in 2025, totaling $5.9 billion through dividends and share repurchases, underscoring the company's commitment to enhancing shareholder value.
- Future Outlook: Management anticipates mid-single-digit earnings growth for 2026, with plans for $3.3 billion in capital improvements, while emphasizing cost control and operating ratio enhancements amid inflation and macroeconomic pressures.
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Union Pacific Reports Disappointing Q4 2025 Financial Results
- Financial Performance Decline: Union Pacific reported a net income of $1.8 billion for Q4 2025, with diluted EPS of $3.11 and adjusted EPS of $2.86, both missing analyst expectations, indicating a decline in profitability.
- Operational Efficiency Deterioration: The company's operating revenue fell 1% to $6.09 billion, with an operating ratio (OR) of 60.5%, worsening by 180 basis points year-over-year, reflecting significant operational inefficiencies that could impact future profitability.
- Freight Performance Improvement: Despite the overall financial downturn, freight car velocity improved by 9% to 239 daily miles, and average train length increased by 3% to 9,729 feet, indicating positive progress in transportation efficiency.
- Future Outlook: The company projects EPS growth for 2026 with a capital plan of $3.3 billion aimed at supporting future growth strategies, despite current financial challenges.
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