Union Pacific reported record 2025 results with strong productivity and service metrics despite mixed quarterly volumes. Management guided mid-single-digit EPS growth for 2026 with $3.3bn capex, emphasizing cost control and pricing discipline. The call focused heavily on the pending Norfolk Southern merger, with confidence in regulatory approval, and highlighted wins in domestic intermodal and coal. Competitor complaints were dismissed as fear of increased competition. 2025 full-year EPS of $11.98 (up 8%) and operating ratio of 59.3% (record).
Buzzberg read2026 earnings growth guided to mid-single digitsUnion Pacific reported record 2025 results with strong productivity and service metrics despite mixed quarterly volumes. Management guided mid-single-digit EPS growth for 2026 with $3.3bn capex, emphasizing cost control and pricing discipline. The call focused heavily on the pending Norfolk Southern merger, with confidence in regulatory approval, and highlighted wins in domestic intermodal and coal. Competitor complaints were dismissed as fear of increased competition. 2025 full-year EPS of $11.98 (up 8%) and operating ratio of 59.3% (record).Read full analysisCollapse analysis
Union Pacific reported record 2025 results with strong productivity and service metrics despite mixed quarterly volumes. Management guided mid-single-digit EPS growth for 2026 with $3.3bn capex, emphasizing cost control and pricing discipline. The call focused heavily on the pending Norfolk Southern merger, with confidence in regulatory approval, and highlighted wins in domestic intermodal and coal. Competitor complaints were dismissed as fear of increased competition. 2025 full-year EPS of $11.98 (up 8%) and operating ratio of 59.3% (record).
2026 guidance: mid-single-digit EPS growth, $3.3bn capex, and OR improvement expected despite macro headwinds.
Norfolk Southern merger remains on track for first half 2027; STB request for more info viewed as procedural blip.
Domestic intermodal set a record in 2025 with over-the-road wins including Uber Freight.
Revenue$6.085B
-3% QoQ
EPS$2.86
-7% QoQ
Gross margin44.88%
reported
Op margin39.23%
reported
What changed this quarter
01
Guidance
2026 earnings growth guided to mid-single digits
Guidance tone
02
Pricing
Price dollars expected to exceed inflation dollars
2025 full-year EPS of $11.98 (up 8%) and operating ratio of 59.3% (record).
03
Costs
2026 inflation slightly over 4%
2026 guidance: mid-single-digit EPS growth, $3.3bn capex, and OR improvement expected despite macro headwinds.
04
Costs
Compensation per employee up 4-5% in 2026
Norfolk Southern merger remains on track for first half 2027; STB request for more info viewed as procedural blip.
Demand & capex
Demand
Bookings & conversion
Management's 2026 guidance of mid-single-digit EPS growth reflects cautious macro assumptions but confidence in operational outperformance, leading to a neutral overall tone.
Capex
Investment and capacity
Management guided 2026 capital spending to roughly $3.3 billion, which is lower than prior levels. Capital priorities include core infrastructure, locomotive modernization, freight car acquisitions, and targeted capacity projects in the Pacific Northwest, Southwest, Houston/Gulf Coast, and intermodal facilities in the Inland Empire and Phoenix.
Tone · Confident
Management emphasized record operational performance, affirmed the merger's strategic benefits despite regulatory delays, and expressed confidence in continuing to improve operating ratio and remain industry leaders.
Bottlenecks
Power & grid
Power or grid availability is constraining capacity
“Yeah, I mean, it's going to add a little bit of cost to us, and that's really cleanup cost, a little, you know, crew delay, extra limos, lodging, those types of things, probably a little extra propene for switch heaters because we lost comm”
Union Pacific's domestic intermodal volumes hit a record in 2025, winning over-the-road conversions from trucking, including with Uber Freight, as service reliability reaches 100%.
“2025 was the best ever year for domestic intermodal, which also delivered another record-breaking quarter driven by exceptional service and business wins.”
Union Pacific's ability to recover from a major winter storm within a few days rather than weeks demonstrates the effectiveness of its buffer resources and network fluidity, reducing revenue loss risk.
“It used to take us weeks to recover. And Eric and the team have done a spectacular job... we should be back to normal by Thursday.”
Union Pacific's domestic intermodal volumes hit a record in 2025, winning over-the-road conversions from trucking, including with Uber Freight, as service reliability reaches 100%. — This suggests structural truck-to-rail shift that could pressure less-than-truckload and truckload carriers long term.
“Hub has come out, Swift has come out, O&E has come out, and what those Intermodal customers see are the investments that Eric and this management team have made.”
Yeah, Chris, I think Jim hit it across the board. You know, all of our customers, not just Intermodal, but let's talk about Intermodal, and we're pretty excited about it. As you know, Hub has come out, Swift has come out, O&E has come out, and what those Intermodal customers see are the investments that Eric and this management team have made. We've talked about them with Inland Empire, Phoenix, Twin Cities. The service is strong. I talked about it in my results today. Wow, we're coming from a place of strength, being able to have our best ever domestic intermodal business, and we talked about it in all 2025. Over the road wins with Uber. Over the road wins in Phoenix. Over the road wins in the Kansas City. So we're coming from a position of strength, and we're excited about it. Got it. The appreciation model is a pretty good one, Jim.
Union Pacific's domestic intermodal volumes hit a record in 2025, winning over-the-road conversions from trucking, including with Uber Freight, as service reliability reaches 100%. — This suggests structural truck-to-rail shift that could pressure less-than-truckload and truckload carriers long term.
Yeah, Chris, I think Jim hit it across the board. You know, all of our customers, not just Intermodal, but let's talk about Intermodal, and we're pretty excited about it. As you know, Hub has come out, Swift has come out, O&E has come out, and what those Intermodal customers see are the investments that Eric and this management team have made. We've talked about them with Inland Empire, Phoenix, Twin Cities. The service is strong. I talked about it in my results today. Wow, we're coming from a place of strength, being able to have our best ever domestic intermodal business, and we talked about it in all 2025. Over the road wins with Uber. Over the road wins in Phoenix. Over the road wins in the Kansas City. So we're coming from a position of strength, and we're excited about it. Got it. The appreciation model is a pretty good one, Jim.