Union Pacific Reports Strong Q3 2025 Adjusted EPS of $3.08, Exceeding Analyst Estimates

Union Pacific (UNP.US) announced its third-quarter 2025 financial results, reporting an adjusted diluted EPS of $3.08, surpassing analyst estimates of $2.99. This represents an 12% increase compared to the $2.75 diluted EPS in the third quarter of 2024. The company’s operating revenue grew 3% to $6.2 billion for the quarter ended September 30, 2025.

Operational Efficiency and Performance

The company demonstrated significant improvements in operational metrics, with a reported operating ratio of 59.2%, an improvement of 110 basis points, and an adjusted operating ratio of 58.5%, an improvement of 180 basis points. These efficiencies were driven by record performance in freight car velocity, locomotive productivity, terminal dwell, train length, workforce productivity, and fuel consumption rate.

Key operational highlights include an 8% improvement in freight car velocity to 226 daily miles per car and a 9% improvement in average terminal dwell time to 20.4 hours. Locomotive productivity also saw a 4% increase to 140 gross ton-miles per horsepower day, while workforce productivity improved 6% to 1,165 car miles per employee.

Revenue Growth Drivers

Operating revenue increased by 3% to $6.2 billion, primarily due to solid core pricing gains. Freight revenue, excluding fuel surcharge, also grew by 4%, indicating strong underlying demand and pricing power.

The Bulk segment experienced a 7% increase in freight revenues, driven by a 6% rise in Grain & grain products revenue and a 16% surge in Coal & renewables revenue. The Industrial segment also contributed positively with a 3% increase in freight revenues, supported by 8% growth in Industrial chemicals & plastics revenue and 7% growth in Metals & minerals revenue.

Management's Forward Outlook

Management remains on track with its Investor Day targets for 2025, anticipating earnings per share growth consistent with attaining a high-single to low-double digit three-year CAGR. The company expects to meet customer demand with strong service and continue to achieve an industry-leading operating ratio and return on invested capital.

Furthermore, Union Pacific projects continued strong cash generation and a capital plan of $3.4 billion. The company also announced a 3% dividend increase for the third quarter of 2025, although share repurchases are paused due to the pending Norfolk Southern merger.