Union Pacific stock sinks after earnings beat, but carload and

Shares of Union Pacific Corp. UNP, +0.60% dropped 5.0% toward a near two-year low in premarket trading Thursday, after the railroad operator reported third-quarter profit and revenue that beat expectations, due to increased pricing and fuel surcharges, but cut its outlook for carload growth and stock repurchases. Net income rose to $1.90 billion, or $3.05 a share, from $1.67 billion, or $1.07 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $3.19 beat the FactSet consensus of $3.06. Revenue grew 18.0% to $6.57 billion, above the FactSet consensus of $6.41 billion. Chief Executive Lance Fritz said “operational inefficiencies” and “inflationary pressures” continued to be a challenge, as operating expenses rose more than sales, growing 25.5% to $3.93 billion. For 2022, the company cut its carload growth guidance to approximately 3% from 4% to 5%. The company said it now expects share repurchases of $6.5 billion in 2022, compared with previous guidance of “in line with 2021,” when the company repurchased $7.3 billion worth of stock. The stock has dropped 20.6% year to date through Wednesday, while the Dow Jones Transportation Average DJT, +1.36% has lost 22.6% and the Dow Jones Industrial Average DJIA, +0.01% has shed 16.3%.

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