Union Pacific: Stability Amid Miss in Q1

Freight-hauling giant Union Pacific (NYSE:UNP) reported first-quarter earnings on Thursday, April 24, that fell slightly short of analysts' consensus expectations. Earnings per share (EPS) (GAAP) were roughly flat year over year at $2.70 and short of the expected $2.74. Revenue was also flat at $6.03 billion and missed the expected $6.07 billion. Operational efficiency was maintained year over year, but did improve compared to Q4 2024's 58.7% ratio.

The quarter demonstrated Union Pacific's solid management amidst some significantly fluctuating market conditions.

Source: Union Pacific. Note: Analysts' consensus estimates for the quarter provided by FactSet. YOY = Year over year.

Overview of Union Pacific

Union Pacific, a leading railroad operator, covers 23 states in the western two-thirds of the United States. Its strategic rail network connects crucial markets through an extensive 32,880-mile network, linking key ports and international gateways. Core operations focus on efficient freight delivery in Bulk, Industrial, and Premium segments, vital for generating growth amidst varying market demands.

Recently, its strategic focus has been on expanding operational excellence through safety improvements and efficient fuel utilization. The company's diverse commodity mix and emphasis on key operational efficiencies form the cornerstone of its continued business development efforts.

Quarterly Highlights

Union Pacific's earnings performance could best be described as stable in Q1. The company missed the analysts' EPS estimate due, in part, to operational challenges and market dynamics. Despite slightly down revenue, the company reported a 7% increase in revenue carloads for Q1. This shift mitigated some revenue pressures due to an unfavorable business mix and lower fuel surcharge revenue.

Operating metrics remained consistent with an operating ratio of 60.7% for Q1 2025, though offset by adverse weather impacts and a leap year adjustment that affected efficiency. Improvements in personnel injury rates, fuel consumption, and freight car velocity in Q1 showcased Union Pacific's focus on safety and efficiency.

Operational advancements, such as record-setting fuel economy with a fuel consumption rate of 1.107 gallons per thousand GTMs, put the company at a potential advantage moving forward.

Looking Ahead

Union Pacific's management affirmed its 2025 outlook while acknowledging 2025's economic uncertainties, especially coal demand. It also reiterated its commitment to improving operational performance through strategic capital investments totaling $3.4 billion and repurchase $4.0 to $4.5 billion worth of shares in 2025, reflecting confidence in future growth potential.

Management remains optimistic about achieving high single- to low double-digit EPS growth for the remainder of the year. Continued focus on safety, service excellence, and operational efficiency are central to overcoming market ambiguities and positioning the company for sustainable growth.

Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 829%* — a market-crushing outperformance compared to 155% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of April 21, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Union Pacific. The Motley Fool has a disclosure policy.