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Tickers in this Article: UNP
On Thursday, October 18, 2012, Union Pacific (NYSE:UNP) will announce its third quarter earnings. The consensus analyst estimate has dropped from $2.22 a share to the current estimate of earnings of $2.19 a share.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Can Earnings Guidance Accurately Predict The Future?

What to Expect: The consensus estimate for Union Pacific's earnings is $2.19 per share, up 18.4% from a year ago when the company reported earnings of $1.85 per share.

Three months ago, the consensus estimate was $2.20. For the fiscal year, analysts are expecting earnings of $8.29 per share.

Union Pacific is expected to report revenue of $5.38 billion for the quarter, beating last year's figure of $5.1 billion by 5.5%. For the fiscal year, expected revenue is $21.15 billion.

Company Performance: Revenue has risen for four consecutive quarters now. It rose 7.5% in the second quarter, 13.9% in the first quarter, 15.8% in the fourth quarter of the last fiscal year and 15.7% in the third quarter of the last fiscal year.

UNP's P/E ratio of 15.7 is under the industry average of 17.57. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

The stock price has risen from $118.34 on July 17, 2012 to $121.05 over the past quarter. September 19, 2012 to September 20, 2012 marked one of Union Pacific's worst periods, as the share price fell $4.10.

The Competition: Union Pacific links 23 states in the western two-thirds of the United States through its operating company, Union Pacific Railroad Company. Analysts are optimistic about Union Pacific, with 19 of 25 assigning it a buy rating. Buy ratings have increased slightly over the last three months.

The company's closest competitor in the railroads industry is Canadian National Railway (CNI). Analysts are more optimistic about Union Pacific than about Canadian National Railway. Only five out of 23 analysts rate the latter a buy.

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