(The following report by Stacie Hamel appeared on the Omaha World-Herald website on July 21.)
OMAHA — Union Pacific Corp. posted a 47 percent gain in net income for the second quarter over the same period in 2004.
The Omaha-based company, whose principal operating company is Union Pacific Railroad, said it had net income of $233 million, or 88 cents per share, in the second quarter, compared with $158 million, or 60 cents per share, in the same period of 2004.
The results exceeded the company’s own forecast of 75 cents to 85 cents per share, as well as analysts’ consensus of 79 cents per share.
The company posted its first year-over-year gain in operating income in six quarters, with $468 million, a 30 percent increase over $359 million in the second quarter last year.
Operating revenue for the quarter was a record $3.3 billion, compared to $3 billion in the second quarter last year.
“While we still have a lot of work to do, our progress is encouraging, and we look forward to continuing this positive trend as we begin to see the benefits of our network management initiatives,” said Chairman and Chief Executive Dick Davidson.
The railroad has struggled in recent years with congestion, service delays and damage from severe weather. Most recently, coal shipments from Wyoming’s Powder River Basin have been reduced because of maintenance problems on the line that U.P. shares with BNSF Railway.
James Valentine, a Morgan Stanley stock analyst, said he sees U.P.’s better-than-expected results as confirmation that the railroad has overcome the worst of its operating issues and that its effort to raise prices is creating better margins and returns.
Valentine wrote in a Thursday morning report that the stock could reach $100 share in the next three years. According to a disclosure state, Valentine does not receive compensation for his recommendations, but Morgan Stanley has been paid for investment banking services provided to U.P.