Union Pacific (NYSE:UNP) financial results for the 1st quarter of their 2020 financial year
Category: Stock Market and Union Pacific
Date: 23 April 2020 Stock Price: $157.27 We take a look at transport company, Union Pacific's earnings report for the 1st quarter of their 2020 financial year. Has the group continued to benefit from a strong US economy? And how will the plunge in demand due to Covid-19 impact the group. And lower oil prices means lower gas prices which means increased competition from truckers.
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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. The railroad's diversified business mix is classified into its Agricultural Products, Energy, Industrial and Premium business groups. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel efficient and environmentally responsible manner
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
Overview of Union Pacific's 1st quarter 2020 earnings report
The numbers below refers to the latest quarter's data unless specified otherwise
Freight Revenues (in millions)
- Total operating revenues: $5.229 billion (down 3% from $5.384.757 billion for the same quarter of the previous year)
- Total operating expenses: $3.086 billion (down 10% from $3.424 billion for the same quarter of the previous year)
- Some margin gain for Union Pacific with their revenues decreasing at a slower rate than their operating expenses
- Net Income: $ 1.474 billion (up 6% from $ 1.391 billion for the same quarter of the previous year)
- Diluted earnings per share: $ 2.15 (up 11% from $1.93 for the same quarter of the previous year)
- PE ratio of Union Pacific: 18.3
- Weighted average number of shares - diluted: 686.2 million (down from 719.5 million for the same quarter of the previous year)
- Dividends declared per share: $0.97 (up 10% from $ 0.88 for the same quarter of the previous year)
- Dividend yield of Union Pacific: 2.47%
- Cash and cash equivalents: $1.130 billion
- Cash and cash equivalents per share: $1.64
- Cash and cash equivalents makes up 1.04% of Union Pacific's market capital
- Cash and cash equivalents makes up 1.81% of Union Pacific's total assets
- Stockholders' equity in Union Pacific : $15.991 billion
- Stockholders equity per share: $23.30
- So Union Pacific is trading at 6.74 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
Freight Revenues (in millions)
- Bulk: 1 534
- Industrial: 1 894
- Premium: 1 452
- Total: 4 880
Union Pacific (UNP) management commentary on their 1st quarter 2020 earnings
Omaha, Neb., April 23, 2020 – Union Pacific Corporation (NYSE: UNP) today reported 2020 first quarter net income of $1.5 billion, or $2.15 per diluted share. This compares to $1.4 billion, or $1.93 per diluted share, in the first quarter 2019.
“Against the backdrop of the emerging COVID-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all time best operating ratio of 59 percent,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”
“Against the backdrop of the emerging COVID-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all time best operating ratio of 59 percent,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”
- Quarterly freight revenue declined 3 percent, compared to first quarter 2019, as positive business mix and core pricing gains were offset by lower volumes and decreased fuel surcharge revenue.
- Union Pacific’s 59 percent operating ratio represented a quarterly record and the fourth consecutive quarter below 60 percent, improving 4.6 points compared to first quarter 2019.
- The $1.87 per gallon average quarterly diesel fuel price in first quarter 2020 was 10 percent lower than first quarter 2019.
- Fuel consumption rate, measured in gallons of fuel per thousand gross ton-miles (GTMs), improved 5% compared to first quarter 2019, achieving a first quarter record in 2020.
- Union Pacific’s reportable personal injury rate of 0.80 incidents per 200,000 employee hours decreased 11 percent compared to first quarter 2019.
- Quarterly freight car velocity was 209 daily miles per car, an 8 percent improvement compared to first quarter 2019.
- Quarterly locomotive productivity was 131 GTMs per horsepower day, an 18 percent improvement compared to first quarter 2019.
- Average maximum train length was 8,396 feet, a 15 percent increase compared to first quarter 2019.
- The Company repurchased 14.3 million shares in first quarter 2020 at an aggregate cost of $2.6 billion.
2020 Outlook
Union Pacific expects second quarter 2020 carload volumes to be down around 25 percent, compared to the second quarter 2019. Although the situation is fluid and highly uncertain, the Company fully expects to maintain sufficient liquidity to sustain an extended period of lower volumes. “Our first priority is the health and safety of our employees during the COVID-19 pandemic, as they perform the work necessary to move the goods communities need during this national emergency,” Fritz said. “The eighteen month implementation of Unified Plan 2020 has put our company in a position of strength, with a strong balance sheet and ample liquidity, as we face today’s fluid and uncertain situation. We remain focused on providing a highly consistent, reliable and efficient service product for our customers.”
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. 5 years ago the stock of Union Pacific was trading at around $107.50 and its currently trading at $157.27 a stock. That's a very decent return of 58.4% provided to Union Pacific stockholders over the last 5 years.
The stock of Union Pacific is trading at a lot closer to its 52 week high of $188.96 than it is to its 52 week low of $105.08 which to us is a clear indication that the short term sentiment and momentum of Union Pacific's stock is positive.
The stock of Union Pacific is trading at a lot closer to its 52 week high of $188.96 than it is to its 52 week low of $105.08 which to us is a clear indication that the short term sentiment and momentum of Union Pacific's stock is positive.
Recent coverage of Union Pacific
The extract below regarding Union Pacific's latest earnings was obtained from TheStreet.com
Union Pacific (UNP) the largest freight rail provider in the West, reported first-quarter earnings that beat expectations, despite the coronavirus epidemic.
Net income totaled $1.47 billion in the quarter, or $2.15 a share, up from $1.39 billion, or $1.93, in the year-earlier quarter. Analysts polled by FactSet forecast $1.89 a share for the latest quarter. Revenue dipped to $5.23 billion in the quarter from $5.38 billion. But this year’s total still beat FactSet's analyst consensus of $5.1 billion.
"Against the backdrop of the emerging covid-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all-time best operating ratio of 59%," Union Pacific Chief Executive Lance Fritz said in a statement. "We also made substantial improvement in employee safety. … Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers."
Union Pacific’s volume - revenue carloads - fell 7% in the first quarter amid the pandemic. It estimates that volume will drop 25% this quarter. Lower fuel prices boosted the company’s profit in the first quarter. Union Pacific’s average diesel price in the quarter dropped 10% from a year earlier. The railroad is prepared for rough times ahead, it said. "Although the sit
Read the full article here
Union Pacific (UNP) the largest freight rail provider in the West, reported first-quarter earnings that beat expectations, despite the coronavirus epidemic.
Net income totaled $1.47 billion in the quarter, or $2.15 a share, up from $1.39 billion, or $1.93, in the year-earlier quarter. Analysts polled by FactSet forecast $1.89 a share for the latest quarter. Revenue dipped to $5.23 billion in the quarter from $5.38 billion. But this year’s total still beat FactSet's analyst consensus of $5.1 billion.
"Against the backdrop of the emerging covid-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all-time best operating ratio of 59%," Union Pacific Chief Executive Lance Fritz said in a statement. "We also made substantial improvement in employee safety. … Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers."
Union Pacific’s volume - revenue carloads - fell 7% in the first quarter amid the pandemic. It estimates that volume will drop 25% this quarter. Lower fuel prices boosted the company’s profit in the first quarter. Union Pacific’s average diesel price in the quarter dropped 10% from a year earlier. The railroad is prepared for rough times ahead, it said. "Although the sit
Read the full article here
Union Pacific (NYSE:UNP) stock valuation
Based on Union Pacific's latest earnings report and their outlook our valuation model provides a target (full value) price at $137.60 per Union Pacific stock (down from our 4th quarter 2019 earnings report valuation of Union Pacific). We therefore believe the stock of Union Pacific is overvalued.
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $137.60. We therefore believe a good entry point into Union Pacific is at $123.80 or below. We expect the stock of Union Pacific to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $137.60. We therefore believe a good entry point into Union Pacific is at $123.80 or below. We expect the stock of Union Pacific to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of Union Pacific
It is expected that Union Pacific will release their 2nd quarter 2020 earnings report at the end of July 2020