UNP

A month has gone by since the last earnings report for Canadian Pacific Kansas City (CP). Shares have added about 6.5% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Canadian Pacific Kansas City due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Canadian Pacific Kansas City Limited before we dive into how investors and analysts have reacted as of late. Canadian Pacific Kansas City Limited reported better-than-expected second-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. However, the company’s stock has declined 2.6% since its earnings release on July 29, 2026. Quarterly earnings of 92 cents per share beat the Zacks Consensus Estimate of 89 cents by 3.4%. The bottom line increased 13% year over year on a core adjusted basis. Operating revenues of $3.01 billion surpassed the consensus estimate of $2.91 billion by 3.3%. In Canadian dollars, revenues increased 13% year over year to C$4.16 billion. In the reported quarter, total freight revenues per revenue ton-mile increased 9% year over year. Total freight revenues per carload rose 12%, reflecting favorable pricing and business mix. On a reported basis, operating income increased 10% year over year to C$1.47 billion. However, total operating expenses rose 14% to C$2.69 billion, mainly due to a 53% increase in fuel expenses. The reported operating ratio deteriorated 90 basis points to 64.6%, while the core adjusted operating ratio worsened by the same magnitude to 61.6%. Volumes, measured in revenue ton-miles, increased 4% year over year to 57.58 billion. Average train speed improved 7%, while average terminal dwell declined 16%, indicating stronger network efficiency. Freight revenues, which accounted for 98% of the top line, increased 13% year over year to C$4.09 billion. CP’s freight business comprises Grain (up 24%), Coal (down 18%), Potash (up 10%), Fertilizers and Sulphur (up 12%), Forest Products (up 2%), Energy, Chemicals and Plastics (up 9%), Metals, Minerals and Consumer Products (up 18%), Automotive (up 22%) and Intermodal (up 11%). Grain benefited from a record Canadian harvest and strong U.S. export demand. Automotive revenues gained from new business wins, while domestic intermodal benefited from the company’s SMX service and improving truck-to-rail conversion opportunities. Coal remained the primary weak spot due to lower mine production and shipment volumes. Non-freight revenues increased 8.6% year over year to C$76 million in the second quarter. Canadian Pacific exited the second quarter with cash and cash equivalents of C$366 million compared with C$409 million at the prior-quarter end. Long-term debt amounted to C$22.25 billion compared with C$21.88 billion at the prior-quarter end. Net cash provided by operating activities increased 27.4% year over year to C$1.73 billion during the second quarter. Capital expenditures totaled C$758 million compared with C$743 million in the year-ago period. During the first six months of 2026, the company returned C$2.37 billion to shareholders through share repurchases and dividends, up 11% year over year. Canadian Pacific continues to expect 2026 core adjusted earnings per share (EPS) to grow in the low double digits from the 2025 level of C$4.61. The company expects 2026 revenue ton-miles to increase in the mid-single digits from the 2025 actual. Management continues to anticipate capital expenditures of approximately C$2.65 billion for 2026, representing a roughly 15% decline from 2025. The core adjusted effective tax rate is expected to be approximately 24.75%. CPKC expects improving freight fundamentals, commercial wins, integration benefits and disciplined cost control to support accelerated volume and earnings growth in the second half of 2026. It turns out, estimates revision have trended upward during the past month. Currently, Canadian Pacific Kansas City has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Canadian Pacific Kansas City has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Canadian Pacific Kansas City belongs to the Zacks Transportation - Rail industry. Another stock from the same industry, Union Pacific (UNP), has gained 6.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Union Pacific reported revenues of $6.86 billion in the last reported quarter, representing a year-over-year change of +11.5%. EPS of $3.41 for the same period compares with $3.03 a year ago. For the current quarter, Union Pacific is expected to post earnings of $3.43 per share, indicating a change of +11.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.9% over the last 30 days. Union Pacific has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Canadian Pacific Kansas City Limited (CP) : Free Stock Analysis Report Union Pacific Corporation (UNP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Union Pacific (UNP) moved back onto investor radar after its Q2 FY2026 earnings on July 23, when the stock rose about 4% following results that topped expectations and an updated full year outlook. See our latest analysis for Union Pacific. Beyond the Q2 earnings move, Union Pacific’s recent share price performance has been strong, with a 90 day share price return of 9.06% and a year to date share price return of 26.66%. The 1 year total shareholder return of 34.60% and 5 year total shareholder return of 46.27% point to momentum that has been building rather than fading. If Union Pacific’s rebound has you thinking about where else capital might work hard, it could be a good moment to scan 36 power grid technology and infrastructure stocks The recent jump in Union Pacific after Q2 leaves a key tension. Are investors finally catching up to progress in the business, or has sentiment moved ahead of what the current valuation can justify? Union Pacific’s most followed valuation narrative places fair value at $327.75, a touch above the $293.73 last close, which is keeping the stock in focus after Q2. Read the complete narrative. Want to see what is behind that gap between the current price and the narrative fair value? The crux is how earnings, margins and future multiples are wired into the model. Curious which assumptions matter most in getting to that $327.75 figure and beyond? The narrative is built on a discount rate of 8.42%, measured revenue growth expectations and higher profit margin assumptions, all set against Union Pacific’s current earnings base. It also layers on a richer future earnings multiple than today and balances this with merger, freight cycle and regulatory considerations that could influence how quickly those earnings are reached or repriced in the market. Result: Fair Value of $327.75 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Union Pacific’s story could change quickly if trade policy or tariffs hit international and intermodal volumes, or if the proposed Norfolk Southern merger faces tougher regulatory hurdles. Find out about the key risks to this Union Pacific narrative. If the mix of optimism and caution around Union Pacific feels familiar, that is the point. The next move is to check the 5 key rewards and 1 important warning sign If Union Pacific has sharpened your focus, do not stop there. Broadening your watchlist now could help you spot opportunities before they become crowded. Target resilient value by scanning companies that look mispriced on quality and fundamentals through the 49 high quality undervalued stocks. Strengthen your income stream by reviewing stocks identified as potential 9 dividend fortresses. Reduce portfolio stress by using the 85 resilient stocks with low risk scores to look for businesses with steadier risk profiles and more defensive characteristics. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include UNP. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Union Pacific stock has delivered a 46.3% total return over the past 5 years, yet current checks point to a company that now looks closer to fairly priced than obviously cheap, with the Discounted Cash Flow (DCF) intrinsic value estimate sitting only slightly above the market price. A 46.3% 5 year return suggests Union Pacific has already rewarded patient shareholders and may now offer a more measured return profile from here. Future earnings and cash flow growth may support the current valuation, while any pressure on volumes, pricing or operating efficiency may weigh on what investors are willing to pay. The stock scores 4 out of 6 on the broader valuation checks, which is a mixed picture rather than a clear bargain or clear overvaluation, and you can see the breakdown here. The issue now is whether Union Pacific's recent gains and near fair value DCF estimate still leave enough upside for new investors at around US$293.73 per share. Union Pacific delivered 34.6% returns over the last year. See how this stacks up to the rest of the Transportation industry. The Discounted Cash Flow model estimates the cash Union Pacific can generate for shareholders over time and discounts it back to today’s value. Union Pacific currently produces around $6.47 billion in free cash flow over the latest twelve months, and the model assumes these cash flows continue to grow from this base rather than decline. Based on these inputs, the intrinsic value is about $294.98 per share, which is very close to the recent market price of around $293.73. That difference implies only a 0.4% discount, so the current price already reflects most of the cash flow that analysts and the model expect Union Pacific to generate. Overall, the Discounted Cash Flow view suggests Union Pacific stock appears roughly fairly valued at current levels. Union Pacific is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Union Pacific. P/E suits Union Pacific because earnings are a key anchor for a mature, profitable railroad. On this metric, Union Pacific trades on a P/E of about 23.8x, compared with a Transportation industry average of roughly 31.8x and a peer group average of around 28.5x. That already places the stock at a discount to what investors are currently paying for many other companies in the sector. The fair P/E ratio implied by the model is about 28.0x, which is higher than Union Pacific’s current 23.8x. This gap suggests the market is pricing the stock below what might be expected given its size, sector, margins and risk profile. For investors who put more weight on earnings than on cash flow models, the current P/E offers another lens that points to a more attractive entry level than a premium one. On the P/E yardstick, Union Pacific stock currently looks undervalued compared with both tailored and broader market benchmarks. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Union Pacific pick up where the valuation checks leave off. They spell out the kind of future for Union Pacific's growth, margins and earnings that would need to play out for the stock to be worth materially more or less than today’s price. Each narrative ties its number to a concrete view of how growth, profitability and risks could develop over time so you can revisit the thinking as new information emerges on the Community page. Share a narrative on Union Pacific and present a clear, number-driven case for where its growth, margins and execution go from here. Then track how that view holds up as new results come through. This is a simple way to add your voice to the Simply Wall St community and see how your thesis on Union Pacific's stock evolves over time. Do you think there's more to the story for Union Pacific? Head over to our Community to see what others are saying! For Union Pacific, the Discounted Cash Flow (DCF) estimate sits very close to the market price, which points to a stock that is no longer obviously mispriced on intrinsic value alone. The P/E comparison still hints at an undervalued multiple relative to peers, yet the broader checks give a mixed signal rather than a clear green light. The tension between a fair intrinsic value and a discounted multiple really comes down to whether earnings quality and growth expectations hold up. The key question from here is whether Union Pacific’s execution justifies a higher multiple or whether the current discount is the market’s way of pricing in risk. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include UNP. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Norfolk Southern Corporation NSC has a stronger near-term setup after a solid second-quarter earnings beat, record railway operating revenues and positive estimate revisions. The stock also offers meaningful price-target upside from the reported share price. The trade-off is valuation. Investors are being asked to pay a premium multiple while cost inflation, service execution and merger-related uncertainty remain important risks. Norfolk Southern reported adjusted second-quarter 2026 earnings of $3.52 per share, up 7% year over year. The result was 9% above the Zacks Consensus Estimate of $3.23. Railway operating revenues rose 11% year over year to a record $3.47 billion, topping the consensus mark by 4.4%. The gain reflected 4% volume growth, stronger revenue per unit and higher fuel surcharges. Estimate momentum adds support to the near-term bull case. The full-year earnings estimate has increased 3.9% over the past four weeks, while the report also shows positive changes across one-week, four-week and 12-week estimate-revision periods. That matters because rising estimates often reinforce favorable short-term sentiment. For NSC, the revisions suggest analysts are giving more credit to revenue improvement and operating execution after the stronger-than-expected quarter. NSC trades at 25.17X forward 12-month earnings. That is above 21.77X for the Zacks rail sub-industry, 13.6X for the broader transportation sector and 21.57X for the S&P 500. The premium is not only relative. Norfolk Southern’s five-year forward P/E range runs from 14.03X to 25.2X, with a median of 18.71X, putting the current multiple near the top of its own historical range. Norfolk Southern’s $383 price target compares with a reported share price of $335.74. That implies meaningful appreciation potential from that level. Still, the upside is not without a cost. Investors are paying a high multiple for projected 2026 EPS of $12.60 versus $12.49 in 2025, suggesting relatively modest near-term earnings growth despite stronger revenue momentum. Norfolk Southern generated $1.40 billion of operating cash flow in the first half of 2026. The company ended June with $1.07 billion in cash and cash equivalents, while total debt declined to $16.62 billion from $17.09 billion at year-end 2025. Shareholder returns remain anchored by the dividend. Norfolk Southern announced a quarterly dividend of $1.35 per share, and the company has paid dividends for 176 consecutive quarters since its formation in 1982. Buybacks, however, remain suspended following the Union Pacific UNP merger agreement. Norfolk Southern Corporation dividend-yield-ttm | Norfolk Southern Corporation Quote The bottom line: NSC’s earnings beat, estimate revisions and price-target upside support investor interest, especially for those focused on momentum. Record revenues and improved demand trends strengthen the near-term story. The stock carries a Zacks Rank #2 (Buy), and its Momentum Score of A supports the near-term case. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. However, the Value Score of F, Growth Score of D and VGM Score of D show that NSC looks more suitable for momentum-oriented investors than for value or growth-focused buyers. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Norfolk Southern Corporation (NSC) : Free Stock Analysis Report Union Pacific Corporation (UNP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Norfolk Southern (NSC) has drawn fresh attention after reporting second quarter 2026 results that showed net income of US$734 million and earnings per share of US$3.26 from continuing operations, compared with the prior year period. See our latest analysis for Norfolk Southern. Norfolk Southern shares have climbed, with a year to date share price return of 16.65% and a 1 year total shareholder return of 22.57%. This suggests that momentum has been supported by recent earnings, dividend affirmations and attention on the proposed Union Pacific merger. If this earnings update has you thinking about what else could be moving, it might be a good time to scan the rail and infrastructure space using our 34 power grid technology and infrastructure stocks Norfolk Southern now trades at a discount to average analyst targets, even after the recent run. The market still prices in a fair bit of caution. Is that restraint justified when you compare it with current fundamentals? Norfolk Southern currently trades on a P/E of 28.6x, which sits slightly above an estimated fair P/E of 27.3x and below broader transportation peers. That leaves the stock looking a touch expensive against a fair value yardstick, while still cheaper than the wider industry. The P/E ratio compares the current share price with earnings per share. For a rail operator like Norfolk Southern, it gives a quick read on how much investors are paying for each dollar of earnings in a sector where assets are heavy and growth can be steady but capital intensive. On one hand, the current P/E is described as expensive relative to the estimated fair P/E level. This signals the market is paying a premium compared with where the SWS fair ratio suggests it could settle. On the other hand, at 28.6x it is described as good value versus the US Transportation industry average P/E of 37.9x and is also in line with the peer average of 28.8x. Taken together, this points to a stock that trades richer than a modelled fair multiple, yet still at a discount to the broader industry that investors may be using as a benchmark for expected earnings power. When set against the US Transportation industry, Norfolk Southern trades at a meaningfully lower P/E than the 37.9x average, and its P/E is very close to the 28.8x peer group average. The fair ratio provides an anchor level that the market could move towards if sentiment or earnings expectations change. This highlights that the current valuation sits just above that modelled fair multiple even as it remains below the wider sector. Explore the SWS fair ratio for Norfolk Southern Result: Price-to-earnings of 28.6x (ABOUT RIGHT) However, Norfolk Southern still faces headline risk from the proposed Union Pacific merger, as well as any shift in US freight volumes that pressures earnings expectations. Find out about the key risks to this Norfolk Southern narrative. While the P/E comparison leaves Norfolk Southern looking roughly in line with peers, the SWS DCF model points in a different direction. With the stock at $335.74 and the DCF value at $270.93, it screens as overvalued using this cash flow based approach. That raises a simple question for you as an investor: Which signal do you trust more when the market heats up, earnings multiples or long term cash flows? Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Norfolk Southern for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. With Norfolk Southern showing a mix of caution and optimism in this update, it makes sense to review the underlying data yourself and decide how you feel about the balance of risks and rewards. To help you weigh both sides before the market moves on, take a look at the 3 key rewards and 1 important warning sign If this Norfolk Southern update has sharpened your focus, do not stop here. The next step is to see what other stocks are quietly lining up compelling setups. Spot potential mispriced opportunities early and scan our broader market for companies that currently look attractively valued using the 49 high quality undervalued stocks. Strengthen your income toolkit and line up stocks that combine higher yields with more resilient profiles through the 9 dividend fortresses. Reduce unpleasant surprises and focus on companies with sturdier finances and steadier fundamentals by starting with the solid balance sheet and fundamentals stocks screener (48 results). This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NSC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

SummaryView Transcript Railroads are seeing a significant upturn in Q2 earnings, with most Class 1 carriers raising their guidance. But the big story is the revelation of strategic deals between Union Pacific and Canadian National, directly tied to the CPKC merger. Discover how these competitive shifts will redefine domestic and cross-border rail operations, bypassing congested hubs and expanding market access for key commodities. Canadian National Railway will not oppose the proposed Norfolk Southern-Union Pacific merger after reaching two separate agreements with Union Pacific — one tied directly to the merger and one that stands on its own — that give CN a faster route to Mexico and a first-ever foothold in Kansas City, rail analyst Bill Stevens told FreightWaves. The deal that is independent of the merger grants CN haulage rights over Union Pacific’s tracks between Memphis and the Mexican border crossing at Eagle Pass, Texas, covering traffic moving between Canadian origins or destinations and Mexico. The arrangement gives CN a faster, more direct route to compete against CPKC, which already offers single-line service across Canada, the U.S., and Mexico. Currently, CN hands traffic to Union Pacific in Chicago, resulting in a shorter length of haul. In exchange, Union Pacific gains rights to use CN’s Chicago bypass — the EJ&E corridor acquired in 2009 — to avoid the city’s notoriously congested rail network. The merger-contingent piece grants CN trackage rights over Union Pacific through Missouri, running two parallel routes across the state. CN gains access to the Kansas City market for the first time operating its own trains and gets the use of Union Pacific’s underutilized Neff Yard in Kansas City. The arrangement addresses competitive concerns for roughly five shippers whose railroad options would drop from two to one under a NS-UP combination, and approximately two dozen shippers — mostly in the St. Louis area — who would go from three options to two. “CN said, hey, this solves our competitive concerns about the merger. We get growth opportunities out of it, and as a result, we will not oppose the merger,” Stevens said. The merger developments come as four of the six Class 1 railroads reported earnings this week showing broad-based volume improvement. CSX volumes were up 6%, Norfolk Southern up 4%, Canadian National up 5% on a revenue-ton-mile basis (flat at 0.35% on a carload basis), and Union Pacific up 2%. Three of the four railroads raised their financial or volume outlooks for the year. Intermodal led the gains: CSX intermodal rose 9%, Union Pacific domestic intermodal posted its fourth straight quarterly volume record with double-digit growth, and Norfolk Southern intermodal climbed 5%, driven in part by truck-to-rail conversions tied to high fuel prices. Coal results diverged sharply by railroad. Norfolk Southern coal was up significantly on exports of metallurgical coal, while Union Pacific coal fell due to high utility stockpiles and low natural gas prices. CN’s Chief Commercial Officer Janet Drysdale noted on the railroad’s earnings call that truck capacity in Canada is not as tight as in the U.S., explaining why CN’s domestic intermodal performance lagged its American peers. CN flagged tariff uncertainty, forest products weakness tied to slow U.S. housing starts, and strength in petroleum, chemicals, and grain as the key variables shaping its outlook. On the industrial side, Norfolk Southern said new plant openings and expansions across its network are running at double last year’s pace, while CSX cited data center construction as a driver of construction-related traffic. Union Pacific also pointed to manufacturing gains it expects will outpace overall industrial production — implying market share gains from truck. The Surface Transportation Board is set to receive a supplemental merger filing from Norfolk Southern and Union Pacific on Monday, ahead of a Future of Rail Symposium in Chattanooga on Tuesday where both railroads’ CEOs are scheduled to appear. CPKC reports earnings Wednesday; BNSF will report alongside parent Berkshire Hathaway next month. CN will not oppose the NS-UP merger after securing haulage rights from Memphis to Eagle Pass and first-ever access to the Kansas City market via Union Pacific’s Neff Yard. Four Class 1 railroads reported volume gains this week — CSX up 6%, NS up 4%, CN up 5% (revenue ton miles), UP up 2% — with three raising full-year outlooks, led by intermodal growth. NS-UP must file supplemental merger information with the Surface Transportation Board on Monday, with both CEOs set to discuss the deal at FreightWaves’ Future of Rail Symposium in Chattanooga on Tuesday. Speaker 1 [0:00] All right, let’s go to the other great mode of domestic surface freight. We’ve got Bill Stevens who’s going to talk, break down all of the action in the rails. It is absolutely hot. Bill, welcome to Freightways Today again. How are you, sir? Speaker 2 [0:16] I am well, Craig. Hi, hi, Julie. How are you both today? Speaker 1 [0:19] Well, we know it’s exciting. You’re going to be down in Chattanooga next Tuesday. We have the Future of Rail Symposium that will be right here in Chattanooga. We got the CEOs of probably the hottest story in freight, Norfolk Southern and Union Pacific. Now, we are told they won’t talk about the merger itself, so it’s going to be in the room. I don’t know if, if, uh, uh, if what you’re expecting to hear from that conversation. Speaker 2 [0:43] Well, um, our timing is perfect because on Monday they are going to file the supplemental information that the Surface Transportation Board asked for regarding the merger. So that is going to be question number one. What does this additional merger do that can— Speaker 3 [1:00] or additional information do that can help get your merger across the finish line from a regulatory review perspective? Um, so we’ll, we’ll have a— Speaker 2 [1:09] we’ll— Speaker 3 [1:09] they’ll have a lot to say about the merger, I am sure. Speaker 1 [1:12] So they will talk about it. I, I— that’s, that’s certainly refreshing. I think it’s what our audience wants. We’re going to give them what they want, right? Speaker 2 [1:18] Yes. Speaker 3 [1:18] Oh yes. Yeah, absolutely. Speaker 1 [1:22] I had the chance to interview the head of the STB, the chair of the STB, Patrick Bucks, a couple of days ago related to the virtual symposium. Now, one of my opening questions was, tell me about what your thoughts on the merger was. And he immediately shut me down. He’s like, I can’t talk about that. But it is great. And we’ve got, you know, BN’s gonna be on CSX. We’ve got some of the Canadian railroads. It’s a jam-packed agenda. I’m super pumped about it, Bill. Speaker 2 [1:52] It is. And we have some, some looks at autonomous trains as well, which is, you know, people say that’s going to be the future of growth in the industry. So it’ll be an interesting, interesting conference to look at. We have earnings reports came out last week and this week, uh, from— actually all this week, it’s been a long week, um, for, uh, 4 out of the, uh, 6 Class 1 railroads. Um, and really the results show what happens when you get a little bit of volume growth. Speaker 3 [2:28] Um, you know, all of the railroads reported improved financial results. Uh, some had record revenue. Speaker 2 [2:36] Um, if you look at this chart here, CSX’s volume was up 6%. UP up 2%, NS up 4%, and Canadian National up 5% with an asterisk because that is the way they prefer to count it based on revenue ton miles. Speaker 3 [2:51] If you look at carloads, which makes it— equates it with the other railroads on that chart, uh, volume was relatively flat at 0.35% growth. Speaker 2 [3:01] Um, but, uh, what, what’s important here too is these improving volume outlooks and financial outlooks have prompted 3 of the 4 railroads to raise their financial outlooks for the year and in some cases their volume growth outlooks. And intermodal has primarily been driving that, but it’s also broad-based across most of the merchandise carload sectors. Coal depends on the railroad. Norfolk Southern was up quite a bit. Speaker 3 [3:38] Thanks to exports of metallurgical coal. Union Pacific was down due to high stockpiles at utility plants and also low natural gas prices. Their business is predominantly utility coal. Speaker 2 [3:52] But, you know, you look at the intermodal figures, you know, CSX up 9%, UP was up 4%. But within that, their domestic intermodal set a 4th straight quarterly record for volume. And they had double-digit growth. Norfolk Southern intermodal was up 5%, and they’re seeing strong truck-to-rail conversions, they say, amid the high fuel prices. And the outlier here is CN. As we’ve talked about on Wednesdays, the intermodal market is different in Canada than it is in the US. And one thing that CN’s Chief Commercial Officer Janet Drysdale said on their earnings call this morning was that truck capacity is not as tight in Canada as it is in the US. Speaker 3 [4:42] And that’s been a key factor in driving those domestic volumes up in the US. Speaker 1 [4:48] The regulatory and immigration crackdown is really an American story. And Canada’s got its own situation with immigration issues, but they’re Their orientation on the Canadian truck drivers is quite different than the administration’s orientation. So it certainly makes sense that the Canadian railroads would not be as bullish on intermodal as what you see. Plus you’ve got the whole tariff overhang on this, Bill. Any thoughts there? Speaker 2 [5:17] Yeah, that’s it exactly. Speaker 3 [5:19] And CN said that the key here for them is to be adaptable amid ongoing trade tensions and disputes and tariffs that are levied one day and pulled back the next. Speaker 2 [5:32] Um, and so never-ending story. Speaker 3 [5:36] Exactly. Speaker 2 [5:36] And, um, you know, they’ve talked about metals traffic is, is still moving, uh, across the border, um, despite the tariffs because the US can’t produce enough of, of aluminum, for example. Um, forest products traffic not doing well for CN. Speaker 3 [5:53] Um, that’s partly due to tariffs, partly due to the low uh, you know, the slow housing starts in the US. Speaker 2 [5:59] Um, but, uh, you know, when you look through, um, the railroad’s outlooks, um, for the various traffic segments, um, you know, they really see broad-based, um, positive outlooks. Speaker 3 [6:14] Uh, at CSX, the only thing that was really, uh, negative was, uh, automotive and, and chemicals. And I think that might have more to do with the chemical plants that, that CSX serves. Speaker 2 [6:26] Union Pacific, the only negative thing that they had on their second half volume outlook was, was coal. Um, everything else, uh, was— Speaker 3 [6:35] they viewed in positive territory in their carload business, which is, you know, industrial products, uh, traffic, the ingredients that go into things. Speaker 2 [6:44] Um, they believe that theirs is going to be above the rate of industrial production, which suggests market share gains versus truck. Norfolk Southern said industrial activity is a positive for them as well as global energy prices. And in the intermodal side, the truck market tightening is positive. Speaker 3 [7:06] They were mixed on consumer demand, I think mostly because of the high fuel prices that are affecting everybody at the pump. Speaker 2 [7:16] And coal, they were kind of neutral. CN was really positive on petroleum and chemicals traffic. Speaker 3 [7:22] That’s a huge export story for them as well as internally with a new fuel facility in the Greater Toronto Area. Grain continues to be a bright spot for them. Speaker 2 [7:34] They do believe that their domestic intermodal is gonna grow this year and then automotive traffic as well. Speaker 3 [7:43] They’re down on intermodal, international intermodal, partly because they’ve been demarketing some of the lower margin traffic. Speaker 1 [7:52] Hey Bill. Speaker 2 [7:52] And then, yep. Speaker 1 [7:53] Go ahead, sorry. Speaker 2 [7:55] No, no. And then just forest products and fertilizers, they had a negative outlook on. CPKC, the other Canadian-based railroad, they report on Wednesday. Speaker 3 [8:03] And then BNSF, which is a unit of Berkshire Hathaway, they will report alongside their parent company next month. Speaker 1 [8:09] So this is a big change in direction. Earlier this year, we’ve covered it extensively. The railroads were pretty bearish on this year, or at least not constructive about this was going to be an off year. I think the industrial slowdown that we saw last year probably prepared them to think the worst. The change is that there’s a massive change in tone, just in terms of perception of the improvements in construction in this year that’s taking place across their business. Are they, do they believe this is really driven by higher demand? I know intermodal is a truck fungible story from a capacity standpoint, but what are they seeing on the demand side, particularly in the economic, the economy? Speaker 2 [8:51] Norfolk Southern pointed to industrial development efforts and how new plants and plant expansions are coming online in a variety of sectors across their network. I believe they said it was double, uh, what it was last year. It’s a similar story at CSX. So they are seeing that industrial economy, uh, pick up and, and gain steam. Speaker 3 [9:14] CSX also pointed to construction around data centers as driving, uh, some of their construction-related traffic increases as well. Um, and, um, Union Pacific had similar things to say about the industrial economy and manufacturing. Speaker 2 [9:29] Um, so I think they were cautious, uh, earlier, earlier on this year because of, um, the length of the freight recession and saying, oh, we see the turnaround, you know, next year or the second half of the year, and then it just not playing out. Speaker 1 [9:48] The industrial, the industrial economy was a dog last year. We see it in the freight data. It just was absolutely anemic, but it has come back since November, and that’s certainly given everyone— but I think Like many of the trucking companies in the first quarter when there was earnings reports, they were constructive, but still cautious. As we like to say in freight, nobody gets credit when you’re a public company for being wrong. In terms of if things are bad, you’re going to get spanked by the markets. If you are overconfident, and that’s why a lot of the public CEOs, particularly the seasoned ones, tend to be more conservative when they’re talking about market developments. It’s interesting, because We talked to a lot of those folks. They’re more bullish when they’re one-on-one than they tend to be with Wall Street when they’re talking about the market, because they have to be very careful to set themselves up for failure. Speaker 3 [10:36] That’s it exactly. It’s way better to under-promise and over-deliver than the other way around. Speaker 1 [10:41] The opposite, you get absolutely obliterated if you’re on the wrong side of that, if you’ve over-promised. As anybody who’s been public knows that that’s a dangerous thing. So Bill, I want to talk about the merger for a second, because it’s obviously the most important story. We have just a number of big announcements this week. You covered the whole story where CN was given— can you explain for those that aren’t real deep into the rail market, why is this a significant development? Speaker 2 [11:10] Well, a couple of things. First, railroading is all about the map. It’s not the highway network. You can’t just go anywhere. Speaker 3 [11:16] You can only go as far as your map gets you. Speaker 2 [11:20] And there were 2 deals that Union Pacific and Canadian National worked out. Speaker 3 [11:25] One is totally tied to the merger and the other never would have happened without merger discussions. Speaker 2 [11:31] So the first is, and this is not dependent on the merger, Canadian National gets a haulage rights agreement between Memphis and the Mexican border at Eagle Pass, Texas, over Union Pacific. So in other words, Union Pacific will haul CN’s traffic from Memphis to Eagle Pass. That enables CN to be a better competitor against CPKC, which can offer single-line service between Canada, the US, and Mexico. This, uh, CN deal applies only to Canadian origins and destinations traffic moving to and from Mexico, um, but it’s a faster route and is, and is far superior to, uh, the existing offerings. Speaker 3 [12:14] They currently hand off traffic to Union Pacific in Chicago, so they get a longer length of haul out of this. Speaker 2 [12:21] In exchange, Union Pacific, uh, gets rights to run over CN’s Chicago bypass. Back in 2009, they, they bought a railroad called the EJ&E, which basically is, is kind of like a loop road around Chicago, doesn’t go through it. Speaker 3 [12:39] And Chicago, of course, is congested, notoriously so at times. Speaker 2 [12:44] And, and it’s inconsistent and long, uh, the transit times through Chicago. Speaker 3 [12:50] CEO Jim Vena said at times when he was at CN, they could get a train faster from British Columbia to Chicago than it took to get from one side of town to the other. Speaker 2 [13:00] That’s an extreme example, but you Union Pacific will get this much faster route through Chicago as a result of this. And they want to— Speaker 3 [13:11] once they put the finishing details on this and reach a final agreement, it’s not contingent on the merger, and they want to start moving this traffic as soon as they can. Speaker 2 [13:21] The part that’s related directly to the merger involves giving CN access to customers, uh, in basically in, in the Midwest. Speaker 3 [13:33] There’s only a handful of them that under this merger, since there’s no overlap, would go from the option of having 2 Class 1 railroads serve them and have seen it just go to one. And it’s the same for customers that currently have the option of 3 railroads going down. Speaker 1 [13:48] Was this just a way of, for those customers that have dependencies, to demonstrate to the STB that they’re trying to find ways to provide some competition? Speaker 3 [13:57] Yes. And Union Pacific and Norfolk Southern were upfront about this when they filed their merger application. They knew that they were going to have to provide access to enhance competition in that overlapping area in the Midwest, which is primarily in Missouri. Speaker 2 [14:15] And so CN will get access. Speaker 1 [14:17] Is it chemicals? Like, what is the— what are the commodities that are impacted? Speaker 2 [14:21] It’s a variety of carload shippers. Speaker 3 [14:23] That specific question did get asked on CN’s earnings call today, and they didn’t really answer it. Speaker 2 [14:29] Um, it’s— Speaker 3 [14:30] it— but we’re, we’re talking 5, 5 shippers who see their option go from 2 to 1, and it, it’s 2 dozen perhaps who see their options go from 3 to 2, and most of those are in the St. Louis area. Um, so it’s a range of carload commodities and ag, given, you know, the location in Missouri. Um, and, and, um, CN will, uh, get at trackage rights over Union Pacific, which would have, uh, basically 2 parallel routes across Missouri. CN will use one, and they gain access to the Kansas City market for the first time, uh, on their own tracks or with their own trains, controlling their own destiny. And they get to use Union Pacific’s, uh, yard, uh, that is really not used very much today, Neff Yard in Kansas City. Speaker 2 [15:21] So in exchange for all this, CN said, hey, this solves our competitive concerns about the merger. We get growth opportunities out of it, and as a result, we will not oppose the merger. Speaker 1 [15:37] Well, Bill, I’m so excited to see you next week. We have the National Model Railroad Association’s convention, their annual convention will be here in Chattanooga. So for those that are interested in model railroads or in trains, it’s the perfect week to be here in Chattanooga to talk about that. And so So much is happening in the railroads. We have the right people coming to the virtual event. It’s a bang-up lineup, by the way. The post Unpacking Rail Earnings: How Volume Growth Fuels Merger Talks appeared first on FreightWaves.

Union Pacific Corporation (NYSE:UNP)'s Big Boy 4014, the world's largest operating steam locomotive, has been touring the country this summer, and grown adults keep tearing up when they see it. CEO Jim Vena said the tour east of the Mississippi wouldn't have been possible without one thing: the railroad operating firm’s pending merger with Norfolk Southern, since Union Pacific's own tracks run west of the river. In part, the nostalgia tour is a goodwill campaign for the biggest deal in the company’s history. On the business itself, Union Pacific Corporation (NYSE:UNP) reported a strong quarter. Revenue rose 12% to $6.86 billion, beating the $6.71 billion expected, and adjusted earnings came in at $3.41 a share versus $3.24 expected. The company raised its full-year guidance to high-single-digit earnings growth, up from mid-single digits. The stock rose about 2% in premarket trading. Costs rose too; operating expenses climbed 13% to $4.1 billion, mostly from a 63% jump in fuel costs linked to the Iran war. Union Pacific Corporation (NYSE:UNP) is trying to buy Norfolk Southern in a deal now valued around $71.5 billion, down from an earlier $85 billion price tag as terms have moved with Union Pacific's stock. It would create the first coast-to-coast U.S. railroad. The day before earnings, Union Pacific settled with Canadian National Railway, a major opponent that had been pushing regulators to demand more information. CN will drop its opposition in exchange for expanded Midwest access and a stake in two jointly owned terminal railroads. Vena called it proof the firm is "ready to move forward in the regulatory process." The deal still isn't approved, though. The Surface Transportation Board (STB) paused its review in May and just this week ordered Union Pacific to make employee-impact data public. Rivals BNSF and Canadian Pacific Kansas City are still lobbying against it, and some shippers and state attorneys general remain opposed. The companies still expect to close the deal in the first half of 2027. That raises a real question. Is this merger clearing its last real hurdles, or did the CN settlement just remove one opponent out of several? The core business (Union Pacific's actual railroad operations) is performing well on its own, guidance beat and rose, and pricing power held up despite surging fuel costs. The CN settlement removes a credible opponent and comes with political tailwinds too: Trump has publicly backed the merger and replaced a regulator who could have opposed it. Union Pacific Corporation (NYSE:UNP) and Norfolk Southern say the deal would save shippers $3.5 billion a year and remove 2.1 million trucks from the road. Wall Street responded fast: Baird, RBC, and JPMorgan all raised price targets this week, with RBC citing the CN deal directly as strengthening the merger's case. READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. BNSF and Canadian Pacific Kansas City (CP), both larger than CN, are still actively opposed, and shippers and state attorneys general haven't backed down. The STB's review remains paused, and forcing public disclosure of employee data suggests regulators aren't rubber-stamping this. Notably, JPMorgan raised its price target but kept a neutral rating, a sign at least one major bank isn't calling this done yet. Fuel costs are also a real, ongoing drag tied to a war with no clean resolution in sight. Insider Monkey's hedge fund database shows funds trimming ahead of this quarter. Overall, 96 funds were holding Union Pacific Corporation (NYSE:UNP) at the end of Q1 2026, down from 106, with dollar value held falling from $7.5 billion to $5.7 billion. That reflects sentiment before this week's beat and the CN settlement, both of which have since turned more positive. In contract, there were only 45 hedge funds with bullish Canadian Pacific Kansas City (CP) positions at the end of Q1. Hedge funds clearly think UNP is a better stock to buy than CP. Union Pacific had a genuinely strong quarter, and the CN settlement is a real step toward its biggest deal ever. However, one opponent down isn't the same as approved. BNSF, Canadian Pacific Kansas City, wary shippers, and a regulator still asking hard questions remain in the picture. The next real test isn't a nostalgia tour; it's whether the Surface Transportation Board restarts its review. While we acknowledge the risk and potential of UNP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UNP and that has 10,000% upside potential, check out our report about this cheapest AI stock. READ NEXT: Ryanair Holdings plc (RYAAY)'s Profit Fell by a Third on the Iran War. Is the Selloff a Buying Opportunity? and Space Exploration Technologies Corp. (SPCX) Stock Just Lost $1 Trillion in a Month. Is the Selloff a Buying Opportunity or a Warning? Disclosure: None.

Interested in Union Pacific Corporation? Here are five stocks we like better. Union Pacific reported record Q2 2026 results, with net income of $2 billion and adjusted EPS of $3.41. Revenue rose 12% to $6.9 billion, helped by 2% volume growth, pricing gains, and higher fuel surcharge revenue. The company raised its full-year 2026 EPS outlook to high single-digit growth, while acknowledging fuel prices remain a major cost headwind. Cash from operations increased 21% to $5.5 billion, and Union Pacific paid down $1.5 billion in long-term debt in the first half. Operational performance improved across the network, with record freight car velocity, train speed, and terminal dwell metrics. Management also highlighted continued progress on the proposed Norfolk Southern merger, including a new settlement agreement with Canadian National. Buffett Spent 60 Years Ignoring Tech and the Bill Is Coming Due Union Pacific (NYSE:UNP) reported record second-quarter 2026 financial results, with executives citing volume growth, pricing gains and improved operating performance, while also raising the railroad’s full-year earnings outlook. Chief Executive Officer Jim Vena said the company delivered “record financial results driven by strong execution and 2% volume growth.” Net income totaled $2 billion, and earnings per share were $3.36 on a reported basis. Adjusted for merger costs, EPS was $3.41. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? AI Broke the Trucks: 3 Transports to Buy After the AI Panic “There was a lot of in and outs as we compare our performance against last year,” Vena said, noting fuel was a major driver of both surcharge revenue and expense. Excluding those factors, he said Union Pacific saw “solid core improvement” in revenue and operating income. Chief Financial Officer Jennifer Hamann said operating revenue rose 12% from a year earlier to $6.9 billion, while freight revenue also increased 12% to $6.5 billion. Fuel surcharge revenue contributed 750 basis points to freight revenue growth and increased by roughly $460 million, reflecting higher fuel prices and volume. → 3 Photonics Companies Making Quantum Tech Possible 2026 Sector Playbook: 3 Sectors Trading Below Fair Value Volume growth added 225 basis points to freight revenue, while core pricing and business mix contributed 175 basis points. Hamann said the company’s “quarterly pricing dollars continue to exceed inflation dollars” as Union Pacific competes for business at levels reflecting the value of its rail service. Business mix was a slight headwind in the quarter, Hamann said, as stronger-than-expected domestic intermodal growth offset the mix benefit from lower international intermodal traffic. → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Operating expenses rose 13% to $4.1 billion, primarily due to higher diesel fuel prices. Fuel expense increased 63%, driven by a 60% increase in the average fuel price and 2% higher gross ton miles. The company’s average price per gallon rose to $3.86 from $2.42 a year earlier, adding 120 basis points to the operating ratio. Union Pacific’s operating ratio was 59.2% in the quarter. Hamann said cash from operations increased 21% to $5.5 billion, while free cash flow totaled $1.8 billion after network reinvestment and dividends. The company also paid down $1.5 billion of long-term debt in the first half, bringing adjusted debt-to-EBITDA to 2.5 times. Union Pacific raised its 2026 outlook to reported EPS growth in the high single-digit range, up from its prior outlook for 6% year-to-date growth in line with January expectations. Hamann said the company expects continued operating ratio improvement despite pressure from fuel costs. “Fuel prices remain volatile,” Hamann said, adding that recent purchases have been above $4 per gallon. In response to an analyst question, she said fuel would likely continue to pressure the operating ratio, but Union Pacific expects volume opportunities and productivity gains to help offset that headwind. Vena said he would prefer lower fuel prices despite the revenue benefit from fuel surcharges, because sustained high fuel prices could affect customers and consumer demand. Hamann said the company has not yet seen that demand impact. Executive Vice President of Marketing and Sales Kenny Rocker said second-quarter freight revenue excluding fuel surcharge grew 4% to $5.5 billion, which he described as a record. In the bulk segment, revenue rose 7% despite a 1% decline in volume. Grain and grain products posted double-digit volume growth, driven by export demand, facility expansions, renewable fuels and related feedstocks. Rocker said the category delivered record second-quarter volume and revenue. Coal volume was pressured by weaker natural gas prices, mild weather and customer downtime. Industrial revenue increased 8% on 3% volume growth. Petrochemicals benefited from improved demand and new business, while metals and minerals volumes rose on higher domestic steel production and business development wins, offsetting weakness in export soda ash. Premium revenue rose 21% on 4% volume growth and a 16% increase in average revenue per car. Domestic intermodal posted its fourth consecutive record quarter in both volume and revenue, with private asset, rail asset and parcel volumes all up double digits. Rocker said the business benefited from constrained truck capacity and share gains. International intermodal volume fell 14%, though the company saw improvement late in the quarter from stronger West Coast imports. Looking ahead, Rocker said grain and grain products are positioned for further second-half growth, while coal is expected to remain challenging due to elevated inventories and lower natural gas prices. He also said domestic intermodal should continue to perform well, supported by over-the-road conversions and Union Pacific’s service product. Executive Vice President of Operations Eric Gehringer said Union Pacific delivered record second-quarter operating performance while handling 2% more volume. Employee and derailment rates improved compared with their respective three-year rolling averages. Freight car velocity increased 5% to 231 miles per day, a second-quarter record. Train speed rose 3%, and terminal dwell improved 7% to 19.7 hours, matching the first-quarter record and marking the third straight quarter below 20 hours. Gehringer said both the intermodal and manifest service performance indexes finished at 95%. The company also reported record workforce productivity, train length and fuel consumption performance. Locomotive productivity improved 1%, fuel consumption improved 1%, workforce productivity rose 5%, and train length increased 2% from a year earlier. Gehringer said Union Pacific continues to make strategic capacity investments, including in the Houston Complex, Pacific Northwest siding extensions and Sunset Double Track projects. Vena also provided an update on Union Pacific’s proposed merger with Norfolk Southern. He said the Surface Transportation Board accepted the company’s application as complete on May 28 and that Union Pacific planned to submit supplemental information requested by the board on Monday. Vena said Union Pacific has expanded its Committed Gateway Pricing and made other voluntary commitments intended to improve the competitive nature of the proposed merger. He also highlighted a newly announced merger settlement agreement with Canadian National. Vena said the agreement with Canadian National addresses ownership and competitive issues involving the Kansas City terminal and Terminal Railroad Association of St. Louis, while also giving Canadian National access between east of St. Louis and Kansas City. He said the agreement would provide CN with a path to move traffic into Mexico and would give Union Pacific better east-to-west access through Chicago. Vena argued the merger would create seamless single-line service, improve reliability, lower costs and make rail more competitive against trucks and other railroads. “Now versus almost one year ago when we first announced our plans to merge, we have even more conviction that our transaction is in the public interest,” he said. Union Pacific Corporation (NYSE: UNP) is one of the largest freight railroad companies in the United States. Its principal operating subsidiary, Union Pacific Railroad, has roots that trace back to the Pacific Railway Act of 1862 and the construction of the first transcontinental rail link completed in 1869. The company is headquartered in Omaha, Nebraska, and operates as a holding company for rail transportation and related services. Union Pacific's core business is the movement of freight by rail across an extensive rail network serving the western two‑thirds of the United States. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Union Pacific Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.