Union Pacific Corporation (UNP:NYSE) announced Q4 2025 earnings on January 27, 2026, reporting adjusted EPS of $2.86 (missing estimates of $2.90-$2.92) but GAAP EPS of $3.11 and a slight revenue dip to $6.09 billion amid lower volumes. Post-announcement, UNP stock rose about 1% to $233.24 (from prior close ~$230.89), with market cap around $138-139 billion.
Quarterly Results
Union Pacific reported fourth quarter 2025 net income of $1.8 billion, a 5% year-over-year increase. Diluted earnings per share (EPS) rose 7% to $3.11, while adjusted diluted EPS was $2.86. Operating revenue reached $6.1 billion, a 1% decline influenced by a 4% decrease in revenue carloads. The reported operating ratio was 60.5%, up 180 basis points, while the adjusted operating ratio reached 60.0%. Results included $234 million from industrial park land sales, adding $0.30 to diluted EPS. Merger costs of $30 million reduced diluted EPS by $0.05.
Annual Performance Context
For the full year 2025, net income reached $7.1 billion, up 6% from 2024. Diluted EPS grew 8% to $11.98, and adjusted diluted EPS increased 5% to $11.66. Total operating revenue rose 1% to $24.5 billion, supported by core pricing gains and a 1% increase in revenue carloads, despite lower fuel surcharges. The full-year reported operating ratio improved 10 basis points to 59.8%, while the adjusted operating ratio improved 60 basis points to 59.3%. Return on invested capital was 16.3%, compared to 15.8% in 2024.
Business and Operations Update
Operational metrics improved in the quarter, with freight car velocity increasing 9% to 239 daily miles per car and terminal dwell improving 9%. Average train length grew 3% to 9,729 feet, while workforce productivity rose 3% to 1,151 car miles per employee. Fourth quarter bulk revenue rose 3% to $1.9 billion, led by a 23% increase in coal and renewables revenue. Industrial revenue grew 1% to $2.1 billion. Premium revenue declined 6%, driven by a 9% drop in intermodal revenue and softer automotive volumes. Full-year safety performance showed improvements in reportable personal injury and derailment rates.
Forward Outlook
The 2026 outlook anticipates mid-single-digit EPS growth. Union Pacific projects a $3.3 billion capital plan, including $1.9 billion for infrastructure replacement and $0.6 billion for capacity facilities. Capital plan also includes $0.4 billion for technology and $0.4 billion for locomotives. Assumptions for 2026 include 4% inflation excluding fuel and an average fuel price of $2.35 per gallon. Economic indicators from S&P Global suggest 2.5% consumer spending growth and 0.1% industrial production growth. Business line expectations include growth in industrial chemicals due to plant expansions. Conversely, coal faces pressure from natural gas prices, and automotive outlook is affected by softer vehicle sales. Merger costs are estimated at $25 million per quarter.
Performance Summary
Union Pacific’s 2025 results included record net income and operational efficiency improvements. The company generated $9.3 billion in cash from operations and returned $4.7 billion to shareholders. The adjusted debt-to-EBITDA ratio remained 2.7, matching 2024 levels. The company remains consistent with EPS compound annual growth targets through 2027. Full-year return on equity reached 40.4%.