Union Pacific’s fourth quarter saw results that mostly tracked with Wall Street’s expectations, as sales held steady year over year and non-GAAP earnings per share matched consensus estimates. Management attributed the flat revenue to mixed freight volumes and persistent inflationary pressures, particularly in compensation and purchased services. CEO Jim Vena emphasized that a major winter weather event in the southern U.S. temporarily disrupted operations, but praised the team’s rapid recovery, noting, “It used to take us weeks to recover. This time, it was just a few days.” The company’s continued focus on operational efficiency and productivity gains was cited as a core reason for maintaining profitability amid ongoing headwinds.
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Union Pacific (UNP) Q4 CY2025 Highlights:
- Revenue: $6.09 billion vs analyst estimates of $6.12 billion (flat year on year, 0.5% miss)
- Adjusted EPS: $2.86 vs analyst estimates of $2.87 (in line)
- Adjusted EBITDA: $3.06 billion vs analyst estimates of $3.10 billion (50.2% margin, 1.6% miss)
- Operating Margin: 39.5%, down from 41.3% in the same quarter last year
- Sales Volumes fell 4.2% year on year (5.2% in the same quarter last year)
- Market Capitalization: $139.5 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Union Pacific’s Q4 Earnings Call
- Jonathan Chappell (Evercore ISI) asked CFO Jennifer Hamann how Union Pacific plans to improve its operating ratio in 2026 given limited pricing power and rising inflation. Hamann explained that further productivity gains and a more favorable business mix will be the main levers, rather than price.
- Andre (Goldman Sachs) inquired about the assumptions behind the $2 billion of targeted net revenue gains from the proposed merger with Norfolk Southern. CEO Jim Vena described the growth estimates as conservative and emphasized that existing capacity and prior investments will enable efficient integration.
- David Vernon (Bernstein) questioned the impact of potential regulatory changes around reciprocal switching. Vena responded that Union Pacific supports competition and optionality for customers, but stressed that implementation details must avoid operational complications for shippers.
- Ken Hoexter (Bank of America) asked about the rationale for reduced capital expenditure and the ramp into mid-single-digit EPS growth. Hamann clarified that capital investments are multi-year and sized to network needs, while Vena highlighted a conservative approach to guidance.
- Stephanie Moore (Jefferies) pressed on pricing opportunities given strong service performance. Kenny Rocker, EVP Marketing, stated that outside of structural headwinds in coal and intermodal, the company remains focused on pricing to the value delivered, with no change in approach.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) Union Pacific’s ability to sustain productivity improvements and operational efficiency despite inflation, (2) the trajectory of domestic and international intermodal volumes amid evolving customer preferences, and (3) regulatory developments affecting the Norfolk Southern merger timeline and competitive landscape. Progress on capital investment projects and resilience in key freight segments, such as chemicals and renewable fuels, will also be critical signposts.
Union Pacific currently trades at $234.64, up from $230.89 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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