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Category: Stock Market and Union Pacific (UNP)
Date: 31 October 2020 Stock Price of Union Pacific: $177.19 We take a look at freight rail transport company, Union Pacific's earnings report for the 3rd quarter of their 2020 fiscal year. Revenues declined by -11% to $4.9 billion for the quarter compared to the same quarter of the previous year as volumes declined by 4% compared to the same quarter of the previous year
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Our third quarter results represent another step in our company’s transformation. We demonstrated our ability to efficiently adjust to a sharp rebound in volume, which increased 19% from the second quarter, while operating expenses, excluding fuel price changes, increased only 11% sequentially-Lance Fritz, Union Pacific chairman, president and chief executive office "
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 3rd quarter 2020 earnings report
The numbers below refers to the latest quarter's data unless specified otherwise
Freight Revenues (in millions)
- Total operating revenues: $4.919 billion (down from $5.516 billion for the same quarter of the previous year)
- Total operating revenues are down by -11% over the last 12 months
- Total operating expenses: $2.888 billion (down from $3.282 billion for the same quarter of the previous year)
- Total operating expenses decreased by -12% over the last 12 months
- Some margin gain for Union Pacific with their revenues decreasing at a slower rate than their operating expenses
- Net Income: $ 1.363 billion (down from $ 1.555 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.01 (down from $2.22 for the same quarter of the previous year)
- PE ratio of Union Pacific: 22.9
- Weighted average number of shares - diluted: 667.8 million (down from 701.9 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: 2.2%
- Cash and cash equivalents: $2.601 billion
- Cash and cash equivalents per share: $3.89
- Cash and cash equivalents makes up 2.2% of Union Pacific's market capital
- Cash and cash equivalents makes up 4.1% of Union Pacific's total assets
- Stockholders' equity in Union Pacific : $17.199 billion
- Stockholders equity per share: $25.76
- So Union Pacific is trading at 6.87 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.
- Firms in the S&P 500 trades at an average price to book value of 3.7 times
Freight Revenues (in millions)
- Bulk: 1 478
- Industrial: 1 567
- Premium: 1 551
- Total: 4 596
Union Pacific (UNP) management commentary on their 3rd quarter 2020 earnings
Omaha, Neb., October 22, 2020 – Union Pacific Corporation (NYSE: UNP) today reported 2020 third quarter net income of $1.4 billion, or $2.01 per diluted share. This compares to $1.6 billion, or $2.22 per diluted share, in the third quarter 2019.
“Our third quarter results represent another step in our company’s transformation. We demonstrated our ability to efficiently adjust to a sharp rebound in volume, which increased 19% from the second quarter, while operating expenses, excluding fuel price changes, increased only 11% sequentially,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “The strong financial results and quality service product delivered in the quarter are a testament to the women and men of Union Pacific as they continue to exhibit their commitment and resilience through safe operations.”
Third Quarter Summary
Summary of Third Quarter Freight Revenues
“Our third quarter results represent another step in our company’s transformation. We demonstrated our ability to efficiently adjust to a sharp rebound in volume, which increased 19% from the second quarter, while operating expenses, excluding fuel price changes, increased only 11% sequentially,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “The strong financial results and quality service product delivered in the quarter are a testament to the women and men of Union Pacific as they continue to exhibit their commitment and resilience through safe operations.”
Third Quarter Summary
- Operating revenue of $4.9 billion was down 11% in third quarter 2020, compared to third quarter 2019. Third quarter business volumes, as measured by total revenue carloads, decreased 4% compared to 2019. Premium volumes increased compared to 2019, while industrial and bulk declined. In addition: Quarterly freight revenue declined 11%, compared to third quarter 2019, as core pricing gains were more than offset by lower volumes, a less favorable business mix, and decreased fuel surcharge revenue. -2- ‐more‐
- Union Pacific’s 58.7% operating ratio, an all-time quarterly record, improved 0.8 points compared to the third quarter 2019. Lower fuel prices positively impacted the operating ratio by 100 basis points.
- The $1.36 per gallon average quarterly diesel fuel price in third quarter 2020 was 35% lower than third quarter 2019.
- Union Pacific’s reportable personal injury rate was 0.90 per 200,000 employeehours for the first three quarters 2020, compared to 0.82 for the same period 2019.
- Quarterly freight car velocity was 220 daily miles per car, a 3% improvement compared to third quarter 2019.
- Quarterly locomotive productivity was 138 gross ton-miles per horsepower day, an all-time quarterly record and an 11% improvement compared to third quarter 2019.
- Quarterly workforce productivity was 998 car miles per employee, an all-time quarterly record and a 13% improvement compared to third quarter 2019.
- Average maximum train length was 8,984 feet, a 13% increase compared to third quarter 2019.
Summary of Third Quarter Freight Revenues
- Bulk down 12%
- Industrial down 18%
- Premium down 1%
2020 Outlook
“The results we are delivering, both operationally and financially, deepen our conviction that the changes we’re making to transform our railroad are on target and on track,” said Fritz. “An improved customer experience, coupled with a lower cost structure, is opening up new markets and opportunities to grow our business as we win with customers and convert more freight to rail.”
“The results we are delivering, both operationally and financially, deepen our conviction that the changes we’re making to transform our railroad are on target and on track,” said Fritz. “An improved customer experience, coupled with a lower cost structure, is opening up new markets and opportunities to grow our business as we win with customers and convert more freight to rail.”
Union Pacific (NYSE:UNP) stock price history over the last 5 years
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 $86 and its currently trading at $177.19 a stock. That's a very decent return of 106% 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 $210.95 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 $210.95 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.
Union Pacific (UNP) vs Norfolk Southern (NSC) vs Kansas City Southern (KSU) stock over the last 5 years
The image below shows the stock price performance of Union Pacific (UNP) vs Norfolk Southern (NSC) vs Kansas City Southern (KSU) stock over the last 5 years. All three freight rail operators active in the USA. And as the image shows the stock price performance of the three freight rail operators are very similar. The summary below shows the stock price returns provided by each stock over the last 5 years:
- Norfolk Southern (NSC): 119.3%
- Union Pacific (UNP): 109.7%
- Kansas City Southern (KSU): 90.9%
Recent coverage of Union Pacific (UNP)
The extract below regarding Union Pacific's latest earnings was obtained from Finance.yahoocom
Shares of Union Pacific Corp. UNP, +0.65% dropped 3.2% in premarket trading Thursday, after the railroad operator reported a third-quarter profit and revenue that fell short of expectations. Net income declined to $1.36 billion, or $2.01 a share, from $1.56 billion, or $2.22 a share, in the year-ago period. The FactSet consensus for earnings per share was $2.06. Revenue fell 11% to $4.92 billion, as core pricing gains were more than offset by lower volumes, to fall just shy of the FactSet consensus of $4.93 billion. Bulk revenue declined 12%, industrial revenue was down 18% and premium revenue slipped 1%. Quarterly workforce productivity increased 13% to quarterly record of 998 car miles per employee
Read the full article here
Shares of Union Pacific Corp. UNP, +0.65% dropped 3.2% in premarket trading Thursday, after the railroad operator reported a third-quarter profit and revenue that fell short of expectations. Net income declined to $1.36 billion, or $2.01 a share, from $1.56 billion, or $2.22 a share, in the year-ago period. The FactSet consensus for earnings per share was $2.06. Revenue fell 11% to $4.92 billion, as core pricing gains were more than offset by lower volumes, to fall just shy of the FactSet consensus of $4.93 billion. Bulk revenue declined 12%, industrial revenue was down 18% and premium revenue slipped 1%. Quarterly workforce productivity increased 13% to quarterly record of 998 car miles per employee
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 price (full value price) at $140.30 per Union Pacific stock (up from our 2nd quarter 2020 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 $140.30. We therefore believe a good entry point into Union Pacific is at $126.30 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 $140.30. We therefore believe a good entry point into Union Pacific is at $126.30 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 4th quarter 2020 earnings report at the end of January 2021