Union Pacific Corp (NYSE:UNP) stock fell 0.94% (As on April 25, 5:25:54 AM UTC-4, Source: Google Finance) after the company reported first-quarter earnings, topping consensus expectations. Freight revenue increased 4% YoY, driven by core pricing gains, fuel surcharge revenue, and business mix, partially offset by 1% fewer carloads. Adjusted operating ratio improved 80 basis points to 59.9%. Union Pacific reported net income of $1.7 billion for the quarter, compared to $1.6 billion in the first quarter of 2025. Results included merger costs of $36 million, or $0.06 per diluted share. The company achieved operational improvements across key metrics, with freight car velocity increasing 9% to 235 daily miles per car and average terminal dwell improving 11% to 19.7 hours. Locomotive productivity rose 6% while fuel consumption rate improved 4%.
Meanwhile, Union Pacific said that it expects a surge in fuel prices, triggered by the conflict in the Middle East, to pressure the railroad operator’s margins, especially in the current quarter. Fuel prices skyrocketed after the U.S.-Israeli strikes on Iran, squeezing margins for companies across sectors ranging from trucking firms to airlines, making it one of the biggest disruptions since the COVID-19 pandemic. U.S. average gasoline prices rose above $4 a gallon in March for the first time in more than three years, capping the sharpest monthly rise in decades. Its operating expenses rose 2.8% to $3.76 billion during the quarter, partly driven by a 7% increase in fuel costs.
On the other hand, the results come after Union Pacific signed an $85 billion agreement last year to buy smaller rival Norfolk Southern, a landmark deal to create the first coast-to-coast U.S. freight rail operator. However, the deal hit a regulatory hurdle in January, when the U.S. Surface Transportation Board sent the deal proposal back for revision due to missing information. Union Pacific executives assured investors that they were on track to file a revised merger application by the end of the month.
UNP in the first quarter of FY 26 has reported the adjusted earnings per share of $2.93, beating the analysts’ estimates for the adjusted earnings per share of $2.86. The company had reported the adjusted revenue growth of 3 percent to $6.22 billion in the first quarter of FY 26, beating the analysts’ estimates for revenue of $6.21 billion.
Union Pacific affirmed its 2026 outlook, projecting mid-single digit reported earnings per share growth and continued operating ratio improvement. The company maintained its capital plan of $3.3 billion and reiterated its commitment to consistent annual dividend increases. Management expects pricing dollars to exceed inflation dollars while meeting customer demand amid a muted economic forecast.