Union Pacific’s Q4 2016 Earnings Preview: Recovering Shipment Volumes And Productivity Improvement Initiatives To Boost Results

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Union Pacific

We expect Union Pacific to report a slight year-over-year improvement in its EPS, as railroads witness a revival in shipment volumes. A revival in coal shipment volumes helped prop up Union Pacific’s overall shipments for Q4. Union Pacific’s coal shipment volumes registered a 10% year-over-year decline in Q4, as compared to a 22% decline for the full year 2016. [1] Rising natural gas prices have spurred the demand for coal from utilities, with gas prices expected to average $3.55 per MMBTU in 2017, around 41% higher than in the year gone by. [2] In addition, a recovery in oil prices is expected to prop up the company’s fuel surcharge revenue in Q4, resulting into a stabilization in the company’s top line after several quarters of sharp declines in revenue. Moreover, Union Pacific’s productivity improvement initiatives are expected to help keep operating costs in check, boosting the company’s earnings. The following tables summarize our expectations from Union Pacific’s Q4 results.

UNP Q4 2016 Pre-earnings

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Union Pacific

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Notes:

  1. Union Pacific’s Week 52 2016 Rail Shipments, Union Pacific Website []
  2. Short Term Energy Outlook, EIA []