In this June 6, 2014 photo, a train operator, left, dismounts a Union Pacific locomotive, while another operator climbs up, at a rail yard in Council Bluffs, Iowa.Nati Harnik/The Associated Press
Union Pacific Corp. posted a third-quarter profit that beat analysts' estimates as a bumper grain crop and a rebound in consumer demand boosted shipments at the biggest publicly traded U.S. railroad.
Profit rose 19 per cent to $1.37-billion (U.S.) or $1.53 a share, from $1.24 a year earlier, the Omaha-based railway said in a statement Thursday. The average projection among 25 analysts surveyed by Bloomberg was for earnings of $1.51 a share.
"Assuming the economy and weather cooperate, we are well positioned to finish up the year with record results," chief executive officer Jack Koraleski said in the statement.
Freight volumes climbed 7 per cent as Union Pacific took advantage of U.S. economic strength while BNSF Railway Co. had a 1-per-cent drop, according to Association of American Railroads data compiled by Bascome Majors, a Susquehanna Financial Group analyst in New York. BNSF, Union Pacific's main rival in the western U.S., is struggling with a congested network.
"The Union Pacific story remains best in class," David Vernon, a Sanford C. Bernstein & Co. analyst, said in an Oct. 8 report. "With investors seeking industrial growth, Union Pacific stands out as a story that can deliver top- and bottom-line growth reliably over the next several years.
Union Pacific rose 1.9 per cent to $108.86 at 8:09 a.m. in New York in early trading. The stock's 27-per-cent gain this year through Wednesday marked the biggest advance among the four carriers in the Standard & Poor's 500 Railroads Index.
Sales increased 11 per cent to $6.18-billion. Analysts had predicted $6.08-billion.
Shipments of goods hauled by railway are climbing along with consumer spending, which rose 0.5 per cent in August. The U.S. jobless rate in September fell to 5.9 per cent, the lowest since 2008, and the U.S. economy probably expanded 3 per cent last quarter, according to economists surveyed by Bloomberg.