Why You Should Get Rid Of Union Pacific Ahead Of Q4 Earnings
Zacks Investment Research | Jan 02, 2019 09:38PM ET
Union Pacific Corporation (NYSE:UNP) is a stock that investors would do better to discard from their portfolios at the moment.
The negative sentiment surrounding the stock is evident from the Zacks Consensus Estimate for fourth-quarter 2018 earnings (scheduled to be released on Jan 24) being revised nearly 1% downward in the last 60 days. The same for full-year earnings has been trimmed by 3 cents. The company also has a VGM Score of D. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three scores.
Let’s delve into the factors responsible for the stock’s dismal performance.
Union Pacific’s high operating expenses are concerning. Operating costs have increased 8% in the first nine months of 2018, mainly due to a 41% rise in fuel-related expenses. The high operating expenses have potential to hamper bottom-line growth going forward.
Additionally, declining coal volumes due to pricing pressures might hurt the company’s fourth-quarter results. At the Credit Suisse (SIX:CSGN) 6th Annual Industrials Conference held last November, the company stated that fourth-quarter volumes at the energy and agricultural segments dropped 10% and 4%, respectively, as of Nov 25.
Union Pacific Corporation Price and Consensus
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