Western Railroad Discussion > Union Pacific stock is up big today on Great earnings.

A new 52 week high as well. 

https://www.msn.com/en-us/money/topstocks/union-pacific-unp-surpasses-q1-earnings-estimates/ar-BBW4eVP



Edited 2 time(s). Last edit at 04/18/19 10:54 by czuleget.

Revenue dropped a little, which suggests UP may be more selective about the business it carries. One of the hallmarks of PSR is scaling down the amount of unprofitable or less profitable business.

Good numbers!

PSR is great for short-term returns but it won't last long...IMHO.

It’s a good report and a lot of people, including me, have made a ton of money on UNP stock.However I’m equally concerned about the loss of market share as has been discussed by many here on T/O and is reflected in the revenue  (sales) decline as the report shows without much comment. Actually when you think about it ,the report is a clear cut example of the Wall Street obsession with EPS while missing the big picture -Revenue growth. Unfortunately for UP, the competition hasn’t forgotten. They recently became   #1 in sales .

kalthoff Wrote:
-------------------------------------------------------
> It’s a good report and a lot of people,
> including me, have made a ton of money on UNP
> stock.However I’m equally concerned about the
> loss of market share as has been discussed by many
> here on T/O and is reflected in the revenue
>  (sales) decline as the report shows without much
> comment. Actually when you think about it ,the
> report is a clear cut example of the Wall Street
> obsession with EPS while missing the big picture
> -Revenue growth. Unfortunately for UP, the
> competition hasn’t forgotten. They recently
> became   #1 in sales .

I would not be concerned about the sales decline yet...too early. The key will be what happens during the second half of the year.

Some possible good news in the intermodal department: a strong rumor BNSF is losing a substantial customer to UP starting in 2020.

Allen

Posted from Android

Doesn’t sound like good news to me!

rdb

Earnings per Share up 15%, iirc from when I read it earlier today

Carloads down considerably
Revenue per car up slightly
Operating profit was only up a percentage-point or two.
The kicker was their stock buybacks last year (~9%). 

Voila!!! Higher EPS!!!



Edited 1 time(s). Last edit at 04/18/19 13:12 by BoilermakerCM.

bradleymckay Wrote:
-------------------------------------------------------
> Some possible good news in the intermodal
> department: a strong rumor BNSF is losing a
> substantial customer to UP starting in 2020.

Good news? For who? I own some UP stock, but I work for BNSF. Imagine my dilemma. LOL

RollinB Wrote:
-------------------------------------------------------
> Doesn’t sound like good news to me!
>
> rdb

Oddly this is coming from someone on BNSF, not UP and its connected to UP requesting trackage rights on NS out of KC. Maybe they've been smoking loco weed? We'll see what happens...

Allen

Posted from Android

kalthoff Wrote:
-------------------------------------------------------
> It’s a good report and a lot of people,
> including me, have made a ton of money on UNP
> stock.However I’m equally concerned about the
> loss of market share as has been discussed by many
> here on T/O and is reflected in the revenue
>  (sales) decline as the report shows without much
> comment. Actually when you think about it ,the
> report is a clear cut example of the Wall Street
> obsession with EPS while missing the big picture
> -Revenue growth. Unfortunately for UP, the
> competition hasn’t forgotten. They recently
> became   #1 in sales .

revenue growth is an awful way to determine the success of a business 

altoonafn Wrote:
-------------------------------------------------------
> kalthoff Wrote:
> --------------------------------------------------
> -----
> > It’s a good report and a lot of people,
> > including me, have made a ton of money on UNP
> > stock.However I’m equally concerned about the
> > loss of market share as has been discussed by
> many
> > here on T/O and is reflected in the revenue
> >  (sales) decline as the report shows without
> much
> > comment. Actually when you think about it ,the
> > report is a clear cut example of the Wall
> Street
> > obsession with EPS while missing the big
> picture
> > -Revenue growth. Unfortunately for UP, the
> > competition hasn’t forgotten. They recently
> > became   #1 in sales .
>
> revenue growth is an awful way to determine the
> success of a business 

Wall St is to vision as a buffalo turd is to intelligence.

AA

Stanford White
Carmel Valley, CA

agentatascadero Wrote:
-------------------------------------------------------
> altoonafn Wrote:
> --------------------------------------------------
> -----
> > kalthoff Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > It’s a good report and a lot of people,
> > > including me, have made a ton of money on UNP
> > > stock.However I’m equally concerned about
> the
> > > loss of market share as has been discussed by
> > many
> > > here on T/O and is reflected in the revenue
> > >  (sales) decline as the report shows without
> > much
> > > comment. Actually when you think about it
> ,the
> > > report is a clear cut example of the Wall
> > Street
> > > obsession with EPS while missing the big
> > picture
> > > -Revenue growth. Unfortunately for UP, the
> > > competition hasn’t forgotten. They recently
> > > became   #1 in sales .
> >
> > revenue growth is an awful way to determine the
> > success of a business 
>
> Wall St is to vision as a buffalo turd is to
> intelligence.
>
> AA

Union Pacific, like most railroads, consumes a lot of capital.And it gets that capital in the securities markets, from investors.  So, it dances to the tune that investors demand.

Right now, debt is a lot cheaper and more tax favored than equity, so that's where the action is.  I'm sure Omaha would be delighted to tell Wall Street to go screw off, but that won't happen

Lackawanna484 Wrote:
-------------------------------------------------------
> Revenue dropped a little, which suggests UP may be
> more selective about the business it carries. One
> of the hallmarks of PSR is scaling down the amount
> of unprofitable or less profitable business.
>
> Good numbers!

I mentioned this in another thread, but the stock price went up pre-market, but stayed flat during the regular trading session. That means small number of large players "set" the market price today, and people who have tried to trade pre-market and afterhours know what I'm talking about.

It's comical to see UP use the term "operational overhaul" instead of PSR as that term is now losing its charm. I guess fools stay stupid for only so long. But you are correct that this is still PSR.

Raising the dividend made sense few months ago, if their profit margins are better, but it's too early to judge today's stock price hike when revenue growth (and increase in market share) usually drives long term gain in stock price... yet UP's revenue FELL 1.7%.  I would have been less suspicious had the stock price risen DURING the trade session, where majority of today's trading volume was driving the market.

Hunt?

bradleymckay Wrote:
-------------------------------------------------------
> RollinB Wrote:
> --------------------------------------------------
> -----
> > Doesn’t sound like good news to me!
> >
> > rdb
>
> Oddly this is coming from someone on BNSF, not UP
> and its connected to UP requesting trackage rights
> on NS out of KC. Maybe they've been smoking loco
> weed? We'll see what happens...
>
> Allen
>
> Posted from Android

Lkirts Wrote:
-------------------------------------------------------
> Hunt?

Now there's a bet against that I'd put money to!  Very, highly unlikely that BNSF is going to lose JB Hunt.  If BNSF is loosing an intermodal contract, it's more likely a marine shipping container line (meh, low margins any ways).  BNSF works with, caters to, and provides a better service to its premium intermodal customers, much more so than UP.  I can think of few major markets where BNSF and UP compete that BNSF doesn't handle the "lions share" of the premium intermodal business (Portland OR for UPS is one I can think of where UP wins).

Stock prices can be an imperfect indicator of performance, but they are widely used. Like inches, quarts, etc.

One big problem is speculators lining up on a trade before earnings releases. If the info goes against them, they have to close out or face a loss. That can lead to gaps up or down when a company reports an unexpected result.

Posted from Android

spwolfmtn Wrote:
-------------------------------------------------------
> ...  I can think of few major
> markets where BNSF and UP compete that BNSF
> doesn't handle the "lions share" of the premium
> intermodal business (Portland OR for UPS is one I
> can think of where UP wins).

Perhaps with the NS trackage rights, UP will win on a few more UPS lanes.

Lkirts Wrote:
-------------------------------------------------------
> Hunt?

I doubt it. Reportedly domestic business in the LA-Dallas-Memphis lane.

Allen

spwolfmtn Wrote:
-------------------------------------------------------
> Lkirts Wrote:
> --------------------------------------------------
> -----
> > Hunt?
>
> Now there's a bet against that I'd put money to! 
> Very, highly unlikely that BNSF is going to lose
> JB Hunt.  If BNSF is loosing an intermodal
> contract, it's more likely a marine shipping
> container line (meh, low margins any ways).  BNSF
> works with, caters to, and provides a better
> service to its premium intermodal customers, much
> more so than UP.  I can think of few major
> markets where BNSF and UP compete that BNSF
> doesn't handle the "lions share" of the premium
> intermodal business (Portland OR for UPS is one I
> can think of where UP wins).

Having been on the ocean carrier side with some of the majors, I know it's pretty difficult for any major customer to switch from one railroad to the other. You can try to shift some volumes if your contract allows for it, but trying to switch from BNSF to UP or UP to BNSF, or CSX to NS or NS to CSX presupposes that the new rail vendor can accommodate the increase in volume without compromising service to its existing customers.