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Category: Stock Market and Union Pacific
Date: 26 August 2019 Stock Price: $159.98 We take a look at transport company, Union Pacific's financial results for the 2nd quarter of their 2019 financial year. Has the group continued to benefit from a strong US economy? We find out below
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About Union Pacific
Union Pacific Corporation (NYSE:UNP) is one of America's leading transportation companies. Its principal operating company, Union Pacific Railroad, is North America's premier railroad franchise, covering 23 states across the western two-thirds of the United States.
VISION:
Building America.
Our vision symbolizes the Union Pacific experience for all the people whose lives we touch. It connects the importance of UP’s rail transportation to America's economy, honors the generations that preceded us and is the promise for the generations that will follow us.
MISSION:
The Men and Women of Union Pacific Are Dedicated to Serve.
Union Pacific works for the good of our customers, shareholders, communities and one another. Our commitment defines us and drives the economic strength of our company and our country.
VALUES:
Passion for Performance.
Our passion, concentration and determination will drive our safety, customer satisfaction and quality results.
High Ethical Standards.
Our reputation will always be a source of pride for our employees and a bond with our customers, shareholders and communities.
Work as a Team.
We are all part of the same team, and working together to reach our common goals is one of our strengths. Communication and respect are the foundation of great teamwork.
Union Pacific Railroad Fast Facts(For Full Year 2018)
VISION:
Building America.
Our vision symbolizes the Union Pacific experience for all the people whose lives we touch. It connects the importance of UP’s rail transportation to America's economy, honors the generations that preceded us and is the promise for the generations that will follow us.
MISSION:
The Men and Women of Union Pacific Are Dedicated to Serve.
Union Pacific works for the good of our customers, shareholders, communities and one another. Our commitment defines us and drives the economic strength of our company and our country.
VALUES:
Passion for Performance.
Our passion, concentration and determination will drive our safety, customer satisfaction and quality results.
High Ethical Standards.
Our reputation will always be a source of pride for our employees and a bond with our customers, shareholders and communities.
Work as a Team.
We are all part of the same team, and working together to reach our common goals is one of our strengths. Communication and respect are the foundation of great teamwork.
Union Pacific Railroad Fast Facts(For Full Year 2018)
- Route Miles: 32,200
- Employees: 42,000
- Annual Payroll: $4.3 billion
- Capital Spending :$3.2 billion
- Capital Spending 2009-2018: $34 billion
- Locomotives: 8,300
- Customers: 10,000
Financial overview of Union Pacific's latest results
Numbers we are interested in: (for the quarter)
Revenue Carloads (Thousands)
- Total operating revenues: $5.596 billion (down 1% from $5.672 for the same quarter of the previous year)
- Total operating expenses: $3.336 billion (down 7% from $3.573 for the same quarter of the previous year)
- Net Income: $ 1.570 billion (up 4% from $ 1.509 billion for the same quarter of the previous year)
- Earnings per share - diluted $ 2.22 (up 12% from $ 1.98 for the same quarter of the previous year)
- Weighted average number of shares - diluted: 708.0 million (down from 763.7 million for the same quarter of the previous year)
- Dividends declared per share :$ 0.88 (up 21% from $ 0.73 for the same quarter of the previous year)
- Cash and cash equivalents: $ 1.049 billion
- Cash and cash equivalents per share: $1.48 (or 0.93% of the group's share price)
- Total common shareholders' equity : $18.171 billion
- Net asset value per share: $25.66
Revenue Carloads (Thousands)
- Agricultural Products: 284 flat from 285 for the same quarter of the previous year)
- Energy: 351 down 9% from 387 for the same quarter of the previous year)
- Industrial: 460 (up 2% from 452 for the same quarter of the previous year)
- Premium: 1,042 (down 5% from 1,101 for the same quarter of the previous year)
- Total: 2,137 (down 4% from 2,225 for the same quarter of the previous year)
Union Pacific (UNP) management commentary on the results and earnings guidance
Omaha, Neb., July 18, 2019 – Union Pacific Corporation (NYSE: UNP) today reported 2019 second quarter net income of $1.6 billion, or $2.22 per diluted share. This compares to $1.5 billion, or $1.98 per diluted share, in the second quarter 2018. “We delivered record second quarter financial results driven by exceptional operating performance, including an all-time best quarterly operating ratio of 59.6 percent,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “These results are a testament to the dedication of the men and women of Union Pacific, who are embracing Unified Plan 2020 and who worked closely with our customers to overcome numerous weather challenges.” Second Quarter Summary Operating revenue of $5.6 billion was down 1 percent in second quarter 2019, compared to second quarter 2018. Second quarter business volumes, as measured by total revenue carloads, decreased 4 percent compared to 2018. Growth in industrial volumes were more than offset by flat agricultural products shipments as well as declines in energy and premium.
In addition:
Summary of Second Quarter Freight Revenues
2019 Outlook
“We look forward to building on the momentum from Unified Plan 2020 and providing a consistent, reliable service product for our customers,” Fritz said. “We remain focused on driving increased shareholder returns by appropriately investing capital in the railroad and returning excess cash to our shareholders"
In addition:
- Quarterly freight revenue declined 2 percent, compared to second quarter 2018, as core pricing gains were offset by lower volumes.
- Union Pacific’s all-time best 59.6 percent operating ratio improved 3.4 points, compared to second quarter 2018.
- The $2.21 per gallon average quarterly diesel fuel price in the second quarter 2019 was 4 percent lower than second quarter 2018.
- Union Pacific recognized a payroll tax refund of $32 million, along with associated interest income of $3 million in second quarter 2019.
- Quarterly freight car velocity was 195 daily miles per car, a 4 percent improvement compared to the second quarter 2018.
- Union Pacific’s first half reportable personal injury rate was 0.87 per 200,000 employee-hours, compared to 0.76 in first half 2018.
- The Company repurchased 3.7 million shares in the second quarter 2019 at an aggregate cost of $639 million.
Summary of Second Quarter Freight Revenues
- Agricultural Products up 4 percent
- Industrial up 4 percent
- Premium down 2 percent
- Energy down 13 percent
2019 Outlook
“We look forward to building on the momentum from Unified Plan 2020 and providing a consistent, reliable service product for our customers,” Fritz said. “We remain focused on driving increased shareholder returns by appropriately investing capital in the railroad and returning excess cash to our shareholders"
Union Pacific (NYSE:UNP) stock price history
The image below obtained from Google shows the stock price history of Union Pacific (NYSE: UNP) for the last 5 years. The image shows there there has been a strong upwards trend in the share price of Union Pacific from early 2016 when the group's stock traded at around $65 a share to the current $159 it is trading at right now. Their earnings and fortunes are tied to the economic growth rate of the USA and strong growth in the USA has benefited the group greatly.
Union Pacific (NYSE:UNP) stock valuation
Based on the group's latest financial results and their outlook we value the group's stock at $174.80 a share. Thus at its current price it offers a bit of value considering it is about $15 dollars below our target (full value price) for the group's shares. Concerns regarding the strength of the US economy might place a damper on the group's future earnings potential if the US economy weakens significantly as some economists and market commentators are predicting.