Union Pacific Corporation ($UNP) Earnings (Q3 FY22)

 Union Pacific Corporation ($UNP) Earnings and Opinion:


Union Pacific is a company in the Industrials sector and operates in the Railroads industry. The company operates a railroad business in the United States. Union Pacific was founded in 1862 and is headquartered in Omaha, Nebraska. The company went public in 1870.

Union Pacific Earnings Results:

  • Revenue of $6.57B beating expectations of $6.42B
  • Operating Ratio of 59.9% beating expectations of 56.86%
  • Adj Operating Ratio of 58.2% beating expectations of 57.05%
  • Operating income of $2.47B missing expectations of $2.75B
  • Adj Diluted EPS of $3.19 beating expectations of $3.04
Opinion:
Union Pacific has had negative sentiment after its earnings report. The company reported earnings before the market opened yesterday. The stock has fallen a good amount since the earnings call. The main reason behind the fall in the stock price was due to the company cutting its forecast for volume growth. Union Pacific claims that the inflation and high inventories are causing the companies to simmer down on shipments. A lot of critics are claiming that the CEO is in the wrong mindset right now, with him worrying about improving margins and not the actual practice of the business. It is a tough blow for the freight industry, with all of the inventory surplus in the businesses, it makes sense to see a fall in these companies in the near-term. However, on the bright side, Union Pacific and other freight and cargo transporters will eventually be back in the game when these surplus inventories run out. The earnings report looked good overall. The Operating ratio is getting closer to the CEO demands, and the profitability didn't seem to be too much of an issue. The bad part, was the outlook was the main reason for the fall in the stock. It makes sense though, because Q4 earnings will probably be a little weaker with the current economic landscape. Looking at valuation, the company is pretty much right at fair value. The P/E ratio comes in at 25.74, which is a miniscule amount above the median of 25.15. EV?EBITDA is right in line with the median at 12.39. P/EBITDA is also right in line with the median at 9.99. In my opinion, Union Pacific is a great company to own. I would almost consider them an essential business because they are the largest operating railroad in the US. If it wasn't for Union Pacific, we would have major cargo and transport issues. I really like this company for the fact that it pays out a nice dividend and it is still showing signs of growth. Both the revenue and profitability are growing, and they are doing so while improving the margins. I think with this downfall of the stock price, due to earnings, and the fair valuation. This is an optimal time to jump in on this stock and have it as foundation in your portfolio.


*Information from Bloomberg and Yahoo Finance

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