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Union Pacific Shares Fall After Q3 Earnings Miss Estimates

Union Pacific share dropped over 5% after it reported its third-quarter 2020 earnings below Wall Street expectations.

Union Pacific Corporation  (UNP) - Get Union Pacific Corporation Report shares dropped over 5% in trading Thursday after it reported its third-quarter 2020 results.

The company reported on Thursday a net income of $1.4 billion year-on-year (or $2.01 per diluted share) in its 2020 third-quarter, declining 12.5% from when it reported $1.6 billion in its 2019 third-quarter.

Union Pacific’s operating revenue was $4.92 billion, down 11% compared to the third quarter of 2019, according to the company’s quarterly results on Thursday.

Estimated operating revenue of $4.94 billion was forecasted by analysts surveyed by Bloomberg.

Business volumes, measured by total revenue carloads, declined 4% year-on-year to $2.04 million, compared to analysts forecast of $2.16 million.

Additionally, the third quarter freight revenue declined 11% year-on-year compared to a 20% decline estimated by analysts.

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The company’s operating ratio was 58.7% year-on-year, down from an estimate of 58.5%. Freight revenue for bulk was down 12% and down 18% for industrial.

"An improved customer experience, coupled with a lower cost structure, is opening up new markets and opportunities to grow our business as we win with customers and convert more freight to rail," said Lance Fritz, Union Pacific chairman, president, and chief executive officer.

In September, Union Pacific awarded $10.2 million in local grants with $5 million in funding targeted to COVID-19 relief.

Union Pacific Corp. shares have climbed 10% since the beginning of the year, while the S&P 500 index has risen slightly more than 6%. The stock increased by 19% in the last 12 months.

Jim Cramer saw strength in Union Pacific when he called the stock out on an October episode of Mad Money, discussing how well shares have done since the March lows.

The Nebraska-based company is a freight-hauling railroad that operates 32,400 miles of track in 23 Western states.