Union Pacific’s second quarter results met Wall Street’s revenue expectations but prompted a negative market reaction, as the company’s adjusted profit per share surpassed consensus estimates. Management attributed the quarter’s performance to volume growth in its Bulk and Industrial segments, disciplined pricing, and operational productivity. CEO Jim Vena highlighted that records in freight revenue and enhanced workforce productivity were achieved despite a challenging freight environment, pointing to “volume growth, core pricing gains and productivity improvements” as key factors in the strong results. Management also acknowledged that a one-time labor expense and a tax benefit impacted reported earnings, but core operating improvements remained the central story.
Is now the time to buy UNP? Find out in our full research report (it’s free).
Union Pacific (UNP) Q2 CY2025 Highlights:
- Revenue: $6.15 billion vs analyst estimates of $6.15 billion (2.4% year-on-year growth, in line)
- Adjusted EPS: $3.03 vs analyst estimates of $2.90 (4.6% beat)
- Adjusted EBITDA: $3.19 billion vs analyst estimates of $3.17 billion (51.9% margin, 0.7% beat)
- Operating Margin: 41%, up from 40% in the same quarter last year
- Sales Volumes rose 3.8% year on year (0.5% in the same quarter last year)
- Market Capitalization: $133.6 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 Union Pacific’s Q2 Earnings Call
- Jonathan B. Chappell (Evercore ISI) questioned the rationale for pursuing merger discussions given Union Pacific’s current operational momentum; CEO Jim Vena emphasized the need for continuous improvement and the risks of standing still in a changing industry.
- Brian Patrick Ossenbeck (JPMorgan) raised the topic of reciprocal switching and open access; Vena stated the company’s focus remains on providing differentiated service to customers, regardless of broader industry changes.
- Stephanie Lynn Benjamin Moore (Jefferies) asked about the sustainability of cost performance in the second half; executives pointed to continued productivity initiatives but highlighted unusual volume cadence due to last year’s intermodal trends.
- Bascome Majors (Susquehanna) inquired about the long-term locomotive modernization program; EVP Eric Gehringer detailed ongoing investments in fleet reliability, fuel efficiency, and emissions reduction, noting that spending priorities may shift with future fleet needs.
- Scott H. Group (Wolfe Research) asked about the sustainability of coal volume strength and future operating ratio improvements; management cited strong service performance, opportunistic coal demand, and ongoing cost discipline as key factors.
Catalysts in Upcoming Quarters
In the upcoming quarters, our team will monitor (1) the ramp-up and utilization of new intermodal terminals and service offerings, (2) the sustainability of volume growth in Bulk and Industrial segments as commodity markets and trade policies evolve, and (3) the company’s ability to maintain operational productivity amid expected volume fluctuations. We’ll also track developments in merger discussions and regulatory reviews, which could have far-reaching implications for Union Pacific’s strategy and industry structure.
Union Pacific currently trades at $223.50, down from $231.16 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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