April 28, 2010 – Union Pacific (UNP) is Barreling Down the Rails

Featured Trades: (UNP), (PPLT), (PALL)

4) Union Pacific (UNP) is Barreling Down the Rails. I am going to run a series of articles over the next several days about the earnings reports of companies which are great 'tells' on the state of the global economy.  Union Pacific (UNP) just announced Q1 profits of $516 million on revenues of $3.96 billion. Volume is up 13% as a national inventory rebuild gets underway, a performance that was much better than expected.  Automobile shipments were up an amazing 88% YOY. Think platinum (PPLT) and palladium (PALL). A rebound in lumber shipments also helped (click here for my lumber piece). Check out the fascinating correlation national rail shipments have with the stock averages in the chart below. UNP is the largest railroad in the US, dominates traffic in the west, and controls all crossings to Mexico. It is the consolidator of the Southern Pacific, Missouri Pacific, Western Pacific, Chicago & North Western railroads.  Some of the profit gain came from a 20% drop in fuel costs. The company says that business is ticking up, but not roaring. It's a story you hear a lot these days. The road is still operating at only 85% of capacity, with 170,000 of its 200,000 cars in use, and 1,300 locomotives still in mothballs. To watch a video of Union Pacific's storied '844' as it barreled through town last year, please click here at http://www.youtube.com/watch?v=4uFoxfTIc7Q , and click here for the back story. I shot this with one hand, while using my other hand to keep my kids from running on to the tracks.