Union Pacific Corporation UNP reported impressive third-quarter 2026 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. Strong volume growth, core pricing gains and higher fuel surcharge revenues contributed to the results.
Quarterly adjusted earnings (excluding 4 cents from acquisition-related expenses) of $3.53 per share beat the Zacks Consensus Estimate of $3.47 by 1.7% and increased 14.6% year over year. Operating revenues of $7.20 billion surpassed the consensus estimate of $7.12 billion by 1.1% and rose 15.3% year over year. Revenue carloads increased 6% year over year.
Union Pacific Corporation Price, Consensus and EPS Surprise
Union Pacific Corporation price-consensus-eps-surprise-chart | Union Pacific Corporation Quote
UNP's Revenue Growth Supported by Higher Freight Demand
Freight revenues (accounting for approximately 95% of the top line) increased 14.9% year over year to $6.81 billion. Freight revenues excluding fuel surcharge increased 6% year over year to $5.64 billion. Fuel surcharge revenues surged to $1.17 billion from $602 million in the year-ago quarter.
Other revenues increased 21.1% year over year to $384 million. Total revenue carloads reached 2.29 million compared with 2.16 million in the prior-year quarter. Average revenue per car increased 8% year over year to $2,971, reflecting improved revenue generation per shipment.
Union Pacific's Expenses Rise on Higher Fuel Costs
Operating income increased 15.5% year over year to $2.94 billion. Total operating expenses increased 15.1% year over year to $4.25 billion, primarily due to higher fuel prices, inflation and volume-related expenses. Fuel expenses surged 68.8% year over year to $1.04 billion.
Expenses on purchased services and materials increased 9.2% year over year to $746 million. Compensation and benefits expenses rose 4.1% to $1.26 billion, while depreciation expenses increased 4% to $643 million. Equipment and other rents declined 2.8% to $206 million.
The operating ratio (operating expenses as a percentage of revenues) improved 10 basis points year over year to 59.1% on a reported basis. However, the adjusted operating ratio deteriorated 30 basis points year over year to 58.8%. Higher fuel prices negatively impacted the operating ratio by 140 basis points.
UNP's Segmental Highlights
Bulk freight revenues were $2.12 billion, up 9.6% year over year. Segmental revenue carloads remained nearly flat at 529,000. Grain and grain products revenues increased 11% to $1.09 billion, while coal and renewables revenues rose 12% to $525 million despite a 3% decline in carloads.
Industrial freight revenues totaled $2.51 billion, up 14.4% year over year. Segmental revenue carloads increased 6% to 606,000. Metals and minerals revenues climbed 17% to $666 million, while energy and specialized markets revenues increased 18% to $771 million.
Freight revenues in the Premium division were $2.19 billion, up 21.4% year over year. Premium revenue carloads increased 9% to 1.16 million. Intermodal revenues rose 27% to $1.52 billion, supported by an 11% increase in intermodal carloads. Automotive revenues grew 11% to $671 million.
Union Pacific's Operational Efficiency Metrics
Freight car velocity improved 1% year over year to 228 daily miles per car. Average terminal dwell time declined 2% to 19.9 hours, reflecting improvements in terminal operations. Workforce productivity increased 5% to 1,219 car miles per employee.
Train length increased 2% to 9,969 feet, while locomotive productivity remained flat at 140 gross ton-miles per horsepower-day. The fuel consumption rate improved 2% to 1.034 gallons per thousand gross ton-miles. However, intermodal and manifest service performance indexes declined six and seven percentage points, respectively.
UNP's Liquidity Position
Union Pacific exited the third quarter of 2026 with cash and cash equivalents of $2.21 billion compared with $1.27 billion at the end of 2025. Long-term debt stood at $29.04 billion compared with $30.29 billion at 2025-end.
During the first nine months of 2026, cash provided by operating activities increased to $8.30 billion from $7.07 billion in the corresponding year-ago period. Free cash flow rose to $2.36 billion from $1.86 billion. The company repaid $1.52 billion of debt during the period.
Union Pacific's 2026 Outlook
For 2026, Union Pacific continues to expect reported earnings per share (EPS) growth in the high-single digits, consistent with its three-year compound annual growth rate target of high-single-digit to low-double-digit growth through 2027.
UNP updated its capital investment plan to $3.5 billion.
Currently, UNP carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Other Transportation Companies
Alaska Air Group, Inc. ALK reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%.
Wabtec Corporation WAB reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.
Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion.
J.B. Hunt Transport Services, Inc. JBHT reported third-quarter 2026 earnings of $1.82 per share, up 3.4% from $1.76 a year ago. The figure beat the Zacks Consensus Estimate of $1.81 by 0.6%.
Operating revenues climbed 20.4% year over year to $3.68 billion and surpassed the consensus mark of $3.56 billion by 3.2%.
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Union Pacific Corporation (UNP): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).