Union Pacific Stock Falls Over 4% After Q3 Earnings Miss, Reaffirms 2024 Outlook

Union Pacific Corporation UNP shares are trading lower after the company reported worse-than-expected third-quarter 2024 earnings.

Union Pacific reported operating revenue growth of 3% year-over-year to $6.09 billion, missing the consensus of $6.14 billion.

Operating revenue increase reflected increased volume and core pricing gains, partially offset by business mix and reduced fuel surcharge revenue.

Freight revenue was $5.768 billion, with Bulk +2% YoY, Industrial +3%, and Premium +7%. Excluding fuel surcharge, Freight revenue grew 5% as revenue carloads grew 6%.

Earnings per share were $2.75 (+10% year-over-year), below the consensus of $2.79.

The operating ratio was 60.3%, up 310 basis points year over year. Operating income increased 11% to $2.416 billion, driven by increased revenue, volume, core pricing gains, and operating efficiency.

Union Pacific reported third-quarter freight car velocity of 210 daily miles per car, +5% YoY, and locomotive productivity of 135 gross ton-miles (GTMs) per horsepower day, a 5% improvement.

Average fuel price per gallon consumed declined by 17% YoY to $2.60.

Union Pacific's quarterly workforce productivity improved by 12% to 1,102 car miles per employee.

"Our third quarter results demonstrate the success of our strategy. Improved safety and service performance supported solid revenue growth that we converted into double-digit improvement in third quarter operating income and earnings per share," commented Union Pacific Chief Executive Officer Jim Vena.

Union Pacific's operating cash flow year-to-date totaled $6.684 billion, up from $5.984 billion a year ago. Free cash flow was $1.855 billion.

UNP expects Q4 results to be consistent sequentially from the third quarter while improving YoY versus the fourth quarter of 2023.

2024 Outlook, reaffirmed: Union Pacific's profitability outlook remains strong, driven by improved network efficiency, robust service offerings, and solid pricing.

The company plans to repurchase approximately $1.5 billion in shares in 2024 and anticipates a capital plan of $3.4 billion.

Price Action: Union Pacific shares are trading lower by 4.68% at $230.06 at the last check Thursday.

Image: Union Pacific