Union Pacific Corporation UNP is constantly looking to increase efficiency for utilization of its resources in a better manner. To this end, the company revamped its business structure recently.
Notably, this railroad operator announced the decision to consolidate its six major divisions into four in order to serve its customers in a better manner. The four new units are Agricultural Products, Energy, Industrial and Premium.
The Agricultural Products division will comprise fertilizers in addition to other units like grains functioning under this division. The Energy segment will include operations related to Coal (which functioned as a separate business unit previously) apart from the frac sand, LPG and petroleum and wind markets.
Meanwhile, the Industrial unit will consist of the erstwhile Industrial Products business unit. However, the composition of this division is not the same as before. While frac sand and wind have been excluded, industrial chemicals, plastics and soda ash, which previously belonged to the Chemicals business unit, have been included in the newly formed business unit.
In fact, the markets that previously fell under the Intermodal and Automotive business units have been clubbed under the Premium division as a result of revamping the Marketing & Sales organization at Union Pacific.
Additionally, the company has decided to merge four of its subsidiaries — Union Pacific Distribution Services, Streamline, ShipCarsNow and Insight Network Logistics — into Loup Logistics Company from Nov 1, 2017. Also, Union Pacific is changing the name of its National Customer Service Center to Customer Care & Support with a renewed focus to cater to customer needs.
In a bid to facilitate customers not served directly by rail, this Zacks Rank #3 (Hold) company is expanding its Economic and Industrial Development team as well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Again, Union Pacific recently announced its intention to trim its workforce by up to 750 employees for increasing efficiencies.
Price Performance
Shares of Union Pacific have struggled so far this year. While the stock has gained 9.9%, the industry rallied 19.9%.
The company is, however, likely to struggle in the third quarter, with Harvey expected to hurt its bottom line to the tune of approximately 5 cents per share. Nevertheless, the company aims to mitigate its struggles through the above efforts in the long run.
Stocks to Consider
Investors interested in the broader Transportation space may consider Canadian National Railway Company CNI, Ryanair Holdings RYAAY and SkyWest SKYW, each holding a Zacks Rank #2 (Buy).
Shares of Canadian National, Ryanair and SkyWest have gained more than 21%, 28% and 9%, respectively, on a year-to-date basis.
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