Saturday, July 26, 2014

Union Pacific Q2 Earnings - UNP continues to ramp up growth

Union Pacfic Q2 Earnings

      Union Pacific released robust Q2 earnings and continued to exemplify growth and a diverse balance within its structure.  Union Pacific beat earnings in top line and bottom line growth, UNP reported $1.43 per share, beating estimates by a cent.  Including UNP reported $6.015 billion in the second quarter compared to estimates of $5.982 billion.  Bottom line growth ascended 21% year over year and top line growth increased  10% year over year.

      Union Pacific's strong performance was attributable to higher volumes as well as pricing gains which is in line with the investment thesis.  Volume in carloads grew 8% year over year and average revenue per car rose 1% year over year. Moreover UNP's operating ratio improved 220 basis points year over year to 63.5%. ( record-breaking performance)  Second quarter results were driven by agricultural revenues of $934 million (up 19%year over year), industrial revenues of 1.13 billion (up 16% year over year), intermodal revenues of 1.15 billion (up 16% year over year) and other revenues of 354 million (up 12 % year over year).

      Union Pacific repurchased 8.3 million shares at an aggregate cost of $806 million during the second quarter.  Union Pacific's results continue to represent the strong investment thesis driven by pricing strategy, strong diversity within its commodities and its geographic presence continues to aid dominate the industry.  Going forward I will re-iterate a BUY rating for UNP and I am confident it will continue to excel in the following quarters.

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