Union Pacific's Return on Invested Capital Overview

According to Benzinga Pro, during Q2, Union Pacific UNP earned $1.83 billion, a 12.58% increase from the preceding quarter. Union Pacific also posted a total of $6.27 billion in sales, a 6.98% increase since Q1. In Q1, Union Pacific earned $1.63 billion, and total sales reached $5.86 billion.

Why Is ROIC Significant?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q2, Union Pacific posted an ROIC of 5.39%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q2, Union Pacific posted an ROIC of 5.39%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

For Union Pacific, the positive return on invested capital ratio of 5.39% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.

Upcoming Earnings Estimate

Union Pacific reported Q2 earnings per share at $2.93/share, which beat analyst predictions of $2.83/share.

This article was generated by Benzinga's automated content engine and reviewed by an editor.