J.P. Morgan Comments On Union Pacific 1Q11 EPS

According to J.P. Morgan, Union Pacific UNP 1Q11 EPS was modestly below forecast and Consensus as compensation / benefits rose more than expected and yield growth was about 1.6 pp lower than forecast. J.P. Morgan said that it expects UNP to continue to face cost pressures over the next several quarters and EPS performance may be somewhat muted. “However, we suspect that many investors will look through performance over the next two quarters because legacy contract repricing in 4Q11 and a more muted inflation profile in 2012 should facilitate improved margin and EPS performance.” Union Pacific closed yesterday at $96.07.