NEW YORK ( TheStreet) -- Shares of Union Pacific ( UNP) were rising on Thursday after the No. 1 publicly held railroad company announced higher-than-expected revenue driven by increased fuel cost recoveries. Shares of the Omaha, Neb.-based operator rose $4.04, or 4.4%, to $95, as the company reported third-quarter 2011 earnings of $904 million, or $1.85 a share, on revenue of $5.1 billion. Analysts were expecting earnings of $1.81 a share on revenue of $5.01 billion.
Union Pacific cited increased fuel cost recoveries, core pricing gains and volume growth as the key drivers for freight revenue growth across its six business groups. "We're clearly demonstrating how Union Pacific's diverse franchise and value-added service offerings are driving record free cash flow and improved financial returns for our shareholders," CEO Jim Young said. The company said severe heat and drought conditions in Texas damaged large sections of track structure, which derailed operating efficiencies. The railroad operator also said its quarterly train speed decreased 4% against the same time in 2010, according to the Association of American Railroads, which monitors those records. Young said that Union Pacific was "optimistic" looking forward as he said the company's business diversity would continue to help deliver record results through the weak economy. "We remain confident in the strength of our fundamental strategy to enhance our franchise, provide increased value for our customers, and generate improved financial returns for our shareholders," Young said. Union Pacific joined CSX ( CSX) as the second of the Class I railroads to report earnings. CSX beat revenue projections and matched profit expectations. Kansas City Southern ( KSU) is expected to report before the bell on Friday. -- Written by Joe Deaux in New York. >To contact the writer, click here: Joe Deaux. >To follow the writer on Twitter, go to: http://twitter.com/JoeDeaux. >To submit a news tip, send an email to: email@example.com