Q3 revenue and net profits reported by Union Pacific Corp. (UNP, Financial) came in higher YOY but missed Wall Street's forecasts, hence premarket trading Thursday resulted in a more than 4% decline in its stock price.
Rising from $1.53 billion in the same period last year, the railroad operator achieved a net income of $1.67 billion for the quarter ending September 30. At $2.75 per share, earnings fell somewhat below the consensus projection of $2.78.
Though it exceeded estimates by $50 million, revenue increased 2.5% to $6.09 billion. With its operating ratio, a major gauge of railroad profitability, improving by 310 basis points to 60.3%, Union Pacific recognized gains in operational efficiency. Reduced fuel costs helped by improving the ratio by 120 basis points. The corporation also noted increases in staff productivity which includes 12% to 1,102 car miles per employee and 5% improvement in locomotive efficiency.
Looking ahead, Union Pacific expects sequentially consistent Q4 performance with expected gains over the same time last year. Supported by continuous improvements in network efficiency and pricing policies, the corporation confirmed its strong momentum of profitability. Notwithstanding these gains, the earnings miss left investors unsatisfied, which weighed-down the stock.
