Union Pacific Corporation (UNP) reported fourth-quarter 2014 adjusted earnings of $1.61 per share, beating the Zacks Consensus Estimate of $1.51 and surging 27% over the year-ago earnings of $1.27 per share.
Figures have adjusted in view of the two-for-one stock split effected by the company in 2014. Results were aided by significant volume improvement. The earnings beat impacted the shares positively.
Revenues increased 9% year over year to $6.2 billion in the fourth quarter, marginally ahead of the Zacks Consensus Estimate of $6.1 billion. Revenue growth was attributable to higher volumes.
An improving economy aided results in the final quarter of 2014. Volumes (carloads) grew 6% year over year. Average revenue per car climbed 3% year over year.
Operating income grew 20% year over year to $2.4 billion. Operating ratio (defined as operating expenses as a percentage of revenue) improved 360 basis points (bps) year over year to 61.4%.
Segment Details
Agricultural revenues were $1,018 million, up 9% year over year. Business volumes increased 4% year over year and average revenue per car rose 5% year over year.
Automotive accounted for $543 million of total revenue, flat year over year. Business volumes were up 2% year over year and average revenue per car fell 2% year over year.
Chemical contributed $922 million in revenues, up 8% year over year. Volumes were up 5% year over year. Average revenue per car rose 3% year over year.
Coal revenues moved up 9% year over year to $1.1 billion. Volumes climbed 9%year over year. Average revenue per car rose 1% year over year.
Industrial Products generated revenues of $1.1 billion, up 15% year over year on 10% volume growth. Average revenue per car was up 5% year over year.
Intermodal segment revenues rose 11% year over year to $1.1 billion and volumes were up 6% year over year. Average revenue per car was up 5% year over year.
Other revenues grew 8% year over year to $359 million.
Liquidity
Union Pacific exited 2014 with cash and cash equivalents of $1,586 million, up from $1,432 million at the end of 2013. Free cash flows were $1,504 million at the end of 2014, compared with $2.1 billion at the end of 2013.
Long-term debt stood at $11 billion in the fourth quarter versus $8.9 billion at year-end 2013. Adjusted debt-to-capitalization ratio increased to 41.3% from 37.6% at year-end 2013.
Share Repurchase
The company repurchased more than 7.7 million shares at an aggregate cost of $880 million during the reported quarter.
Upcoming Releases
Kansas City Southern (KSU) will unveil its fourth quarter results on Jan 23. Another transportation stock, Norfolk Southern Corp. (NSC) will report results on Jan 26.
Zacks Rank
Currently, Union Pacific carries a Zacks Rank #3 (Hold). A better-ranked stock in the transportation industry is Covenant Transportation Group (CVTI). The stock carries a Zacks Rank #1 (Strong Buy).
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