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Union Pacific (NYSE:UNP) just dropped a strong Q4 report, sending shares up nearly 5% this morning. The freight giant crushed earnings expectations with EPS jumping 7% to $2.91, despite a slight 1% dip in revenue to $6.12 billion. The real kicker? Fuel costs plunged 23%, giving profits a solid boost, while workforce productivity hit an all-time high of 1,118 car miles per employee. CEO Jim Vena called it a strong finish to the year and signaled that Union Pacific is locked in on operational efficiency heading into 2025.
Investors are watching closely as Union Pacific keeps executing despite economic uncertainty. The company's operating ratio tightened to 58.7%, a 220-basis-point improvement, and freight volumes picked up, with revenue carloads climbing 5%. For the full year, EPS landed at $11.09, up from $10.45 in 2023. Union Pacific also stayed aggressive on buybacks, snapping up $1.5 billion worth of shares while keeping a disciplined capital spend at $3.4 billion. Freight car velocity nudged up 1% to 219 miles per car daily, another sign of improving network efficiency.
Looking ahead, Union Pacific isn't ignoring potential headwinds like fluctuating coal demand and softer international intermodal trends, but it's sticking to its long-term game plan. Management reaffirmed its EPS growth target in the high-single to low-double digits, with $3.4 billion earmarked for capital investments in 2025. The company expects to keep delivering industry-leading returns while maintaining strong financial discipline. With momentum on its side and a focus on efficiency, Union Pacific is shaping up to be a freight rail powerhouse in 2025.
This article first appeared on GuruFocus.