What Analysts Expect from Union Pacific’s Third Quarter

Analysts’ estimates for UNP’s third quarter

Wall Street analysts expect revenue of ~$5.9 billion for Union Pacific (UNP) in the third quarter. Compared to its revenue of $5.4 billion in the third quarter of 2017, this amount translates into an estimated YoY (year-over-year) rise of 9.4%.

For the next four quarters, analysts expect UNP’s revenue to be $23.4 billion. In the last four quarters, the company recorded revenue of $22.0 billion. Thus, analysts’ projections indicate potential revenue growth of 6.7% over the next four quarters.

What Analysts Expect from Union Pacific’s Third Quarter

UNP’s third-quarter revenue considerations

Union Pacific’s volume growth as of Week 41 this year has been 4.4%, higher than the overall 3.9% rise reported by US railroad companies (XLI). This outperformance emphasizes the importance of Union Pacific’s revenue growth initiatives in the year.

By volume, the company reported higher shipments of ethanol and food and beverages in the quarter. Industrial sector volumes of merchandise such as plastics aided this volume growth. In the energy sector, while petroleum products and fractionating sand shipments supported volumes, coal continued to downplay shipment growth. Intermodal growth should drive UNP’s volumes going forward.

What Analysts Expect from Union Pacific’s Third Quarter

Analysts’ earnings estimates

Analysts expect Union Pacific to report adjusted EPS of ~$2.1 in the third quarter. During the corresponding period last year, the company’s adjusted EPS were ~$1.50. On a YoY basis, analysts anticipate a 40.6% rise in UNP’s third-quarter earnings. For 2018, analysts expect the railroad company to report adjusted EPS of ~$7.80, indicating a 34.7% YoY rise.

Among major railroad companies, Norfolk Southern’s (NSC) adjusted EPS are expected to rise 38.2% YoY to $9.16 in 2018 from $6.6. CSX Corporation (CSX) is expected to report 66.2% YoY growth in its 2018 adjusted EPS of $3.82 from $2.30. The largest US short line carrier, Genesee & Wyoming (GWR) is expected to report adjusted EPS of $3.87, indicating a 33.1% YoY rise. Railroad companies’ earnings growth is expected to come from pricing gains, cost-cutting initiatives, and stock buybacks going forward.

In the last article, we’ll take a look at analysts’ recommendations for Union Pacific and its peers.