Union Pacific’s third quarter saw a muted market response despite meeting Wall Street’s revenue expectations and exceeding profit estimates. Management attributed the results to core pricing gains, operational efficiencies, and productivity improvements, particularly in workforce and fuel consumption. CEO Vincenzo Vena acknowledged that, while volumes were down slightly, strong pricing and favorable business mix offset macroeconomic pressures. CFO Jennifer Hamann noted, “Compensation and benefits decreased 1% as 4% lower workforce levels and record productivity more than offset the impact of wage inflation.” The company’s ability to maintain service reliability and set operational records was highlighted as a key factor in sustaining financial performance amid softer end markets.
Is now the time to buy UNP? Find out in our full research report (it’s free for active Edge members).
Union Pacific (UNP) Q3 CY2025 Highlights:
- Revenue: $6.24 billion vs analyst estimates of $6.25 billion (2.5% year-on-year growth, in line)
- Adjusted EPS: $3.08 vs analyst estimates of $3.00 (2.8% beat)
- Adjusted EBITDA: $3.21 billion vs analyst estimates of $3.22 billion (51.4% margin, in line)
- Operating Margin: 40.8%, up from 39.7% in the same quarter last year
- Sales Volumes were flat year on year (5.6% in the same quarter last year)
- Market Capitalization: $128.3 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 Q3 Earnings Call
- Thomas Wadewitz (UBS) asked about progress and timing for the Norfolk Southern merger application. CEO Vincenzo Vena explained the focus on operational readiness and customer support, aiming for a filing by early December.
- Ken Hoexter (Bank of America) questioned puts and takes for fourth quarter margins. CFO Jennifer Hamann cited volume declines, merger costs, and productivity challenges as headwinds to earnings versus last year’s record quarter.
- Brandon Oglenski (Barclays) asked if increased competitor collaboration poses a risk during the merger review. Vena argued that competitor reactions underscore the merger’s competitive benefits and anticipated regulatory support.
- Jonathan Chappell (Evercore ISI) inquired about management’s ability to sustain productivity gains amid lower volumes. Operations Chief Eric Gehringer stressed resource buffers and adaptability, with adjustments to hiring and equipment as needed.
- Scott Group (Wolfe Research) sought clarity on the sustainability of positive pricing trends. Hamann described pricing as “challenging,” with ongoing support from core service improvements but limited help from a weak intermodal market.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be monitoring (1) the pace of regulatory and customer approvals for the Norfolk Southern merger, (2) management’s ability to sustain pricing and operational improvements despite volume headwinds, and (3) the impact of new business wins in petrochemicals and metals on overall volume trends. Ongoing developments in productivity and cost management, as well as updates on debt reduction and integration milestones, will also be key indicators of execution.
Union Pacific currently trades at $217.50, down from $225.34 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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