Union Pacific Corporation UNP reported first-quarter 2015 earnings of $1.30 per share, well short of the Zacks Consensus Estimate of $1.37. Earnings were, however, up 9% from the year-ago figure.
Earnings have been adjusted in view of the two-for-one stock split affected by the company in 2014. Revenues decreased 0.4% year over year to $5.61 billion in the first quarter, well short of the Zacks Consensus Estimate of $5.69 billion. Bulk of the revenues came from freight revenues. Weakness in the coal, intermodal and chemicals units hurt results. The below-par results impacted the shares negatively.
Volumes (carloads) declined 2% year over year. The labor dispute at West Coast ports contributed to the below-par results. Average revenue per car inched up 1% year over year.
Operating income grew 7% year over year to $2 billion. Operating ratio (defined as operating expenses as a percentage of revenues) improved 230 basis points year over year to 64.8%.
Segment Details
Agricultural revenues were $939 million, up 3% year over year. Business volumes increased 3% year over year and average revenue per car rose 1% year over year.
Automotive accounted for $516 million of freight revenues, up 6% year over year. Business volumes were up 7% year over year and average revenue per car fell 1% year over year.
Chemical contributed $897 million, flat year over year. Volumes were up 1% year over year. Average revenue per car rose 2% year over year.
Coal revenues moved down 5% year over year to $915 million. Volumes declined 7% year over year. Average revenue per car rose 3% year over year.
Industrial Products generated revenues of $1.1 billion, up 1% year over year on 3% volume decline. Average revenue per car was up 3% year over year.
Intermodal segment revenues declined 5% year over year to $967 million and volumes were down 3% year over year. Average revenue per car too declined 3% year over year.
Other revenues grew 3% year over year to $363 million.
Liquidity
Union Pacific exited the first quarter of 2015 with cash and cash equivalents of $1,587 million, flat sequentially. Long-term debt stood at $11.9 billion in the first quarter of 2015 versus $11 billion at the end of 2014. Adjusted debt-to-capitalization ratio increased to 42.6% from 41.3% at 2014-end.
Share Repurchase
During the quarter, the company bought back almost 6.9 million shares for $807 million.
Upcoming Release
Another transportation stock, Norfolk Southern Corp. NSC will report results on Apr 29.
Zacks Rank
Currently, Union Pacific carries a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation industry are Covenant Transportation Group CVTI and Ryder System R. Covenant Transportation Group sports a Zacks Rank #1 (Strong Buy) while Ryder System carries a Zacks Rank #2 (Buy).
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