All Aboard for Union Pacific's Pre-Earnings Rundown

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All Aboard for Union Pacific's Pre-Earnings Rundown PART 1 OF 5

Inside Union Pacific’s Stock Performance Ahead of Its 1Q17 Earnings

Union Pacific’s 1Q17 earnings

Omaha-headquartered Western US freight railroad giant Union Pacific (UNP) is set to report its 1Q17 earnings on April 27, 2017, at 8:45 AM EST. The company will hold a conference call with its investors and analysts at that time.

Inside Union Pacific&#8217;s Stock Performance Ahead of Its 1Q17 Earnings

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After a lackluster 2016, railroads should have been back on a solid track in 2017. Canadian Pacific (CP) was the first class I railroad to report 1Q17 earnings, and the takeaway from CP is that freight momentum has yet to pick up to desired levels. While its revenue was marginal, the 17% fall in diluted its EPS (earnings per share) was noteworthy.

UNP’s stock movement

Given its mammoth operations, Union Pacific carload change offers some insights in the industry environment. Its carloads expanded 3% on a year-to-date basis in 1Q17. Since the beginning of 2017, UNP has returned an equal percent to investors (as of April 19). Below are the returns generated by its peer group since January 1, 2017.

  • CSX (CSX): 30.6%
  • Norfolk Southern (NSC): 4.2%
  • Kansas City Southern (KSU): 5%
  • Canadian National Railway (CNI): 8.7%
  • Canadian Pacific: 5%
  • Genesee & Wyoming (GWR): -4.6%

The iShares Dow Jones US Industrial ETF (IYJ) has returned 3.7% during the same period.

Management insights

In its 4Q16 earnings call, Union Pacific stated that it expects freight volume headwinds to continue in 1H17. For fiscal 2017, UNP expects freight volumes to grow by low single digits, and the company appears to have given enough hints for the first half of 2017. For this reason, many investors aren’t expecting too much from this major freight rail company in 1Q17.

We’ll discuss the details of these hints throughout this series. Specifically, we’ll turn to Wall Street analysts for their opinion on Union Pacific’s revenue and margins in 2017 and make sure to examine their recommendations for both UNP and its peers.

Continue to the next part for a look at UNP’s revenue expectations.


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