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Union Pacific (UNP) Slashes 2021 Volume Outlook, Stock Slips

Zacks Equity Research
·2 min read

At the 2021 Stephens Annual Investor Conference held on Dec 1, Union Pacific UNP reduced its forecast for full-year volumes and operating ratio as supply chain disruptions hit its shipments. Following this, shares of the company dipped 1% at the close of business on Dec 1.

While UNP reiterated its expectation of record financial performance in 2021, it lowered its volume growth forecast to approximately 4% from 5% expected earlier. Previously, in October, while releasing its third-quarter 2021 results, the company had slashed its volume growth forecast to 5% from 7%.

Supply chain disruptions are weighing on Union Pacific’s automotive and intermodal volumes. In the third quarter, automotive and intermodal volumes declined 18% and 6%, respectively. With this, the premium segment (which includes automotive and intermodal) volumes fell 9%. Persistent weakness in the premium segment, which accounted for 30.3% of UNP’s total freight revenues in the September quarter, might dent the company’s top line.

Union Pacific Corporation Price

Union Pacific Corporation Price
Union Pacific Corporation Price

Union Pacific Corporation price | Union Pacific Corporation Quote

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Union Pacific now anticipates operating ratio (operating expenses as a percentage of revenues) to improve around 150 basis points in 2021 from roughly 175 basis points the company had forecast while releasing third-quarter results in October. Additionally, UNP now estimates productivity of approximately $250 million for the full year.

Zacks Rank & Key Picks

Union Pacific carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks within the broader Transportation sector:

Schneider National SNDR sports a Zacks Rank #1 (Strong Buy). The company has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 21%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Schneider National have rallied more than 16% so far this year.

Expeditors International of Washington EXPD also sports a Zacks Rank #1. The company’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 29.1%.

Shares of Expeditors have appreciated nearly 30% so far this year.

Landstar System LSTR carries a Zacks Rank #2 (Buy). The company’s earnings have trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 11.4%.

Shares of Landstar have gained more than 26% so far this year.


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Schneider National, Inc. (SNDR) : Free Stock Analysis Report

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Zacks Investment Research