Union Pacific sluggish volumes and high debt levels are concerning

But they had to take out debt to pay dividends and buy back stock!!

"Recently, we issued an updated research report on Union Pacific Corporation (UNP - Free Report) . The company is witnessing sluggish overall volumes (measured by total revenue carload) due to weakness in key divisions. Due to weak volumes, freight revenues, which account for a bulk of its top line, are declining. Notably, freight revenues were down 4% in the first nine months of 2019.

The same is likely to affect Union Pacific’s fourth-quarter results, scheduled to be released on Jan 23, 2020. In fact, the company issued a drab forecast for overall volumes at the Credit Suisse 7th Annual Industrial Conference in December, thanks to headwinds ranging from trade tensions to economic slowdown.

The company’s chief financial officer, Robert Knight, stated that overall volumes for the fourth quarter of 2019 are expected to decrease a little more than 10% on a year-over-year basis. At the same conference, Union Pacific stated that the top line for the December quarter is anticipated to decline by a similar percentage as volumes.

Moreover, its high debt levels are concerning. Notably, the debt/EBITDA ratio (adjusted) increased to 2.6 as of Sep 30, 2019, from 2.3 at 2018-end. Additionally, the massive capex might be a spoilsport.

Due to the above-mentioned headwinds, shares of Union Pacific have underperformed the S&P 500 index over the past six months. The stock has gained 5.8%, while the index appreciated 9.8% in the same time frame."

https://www.zacks.com/stock/news/694515/union-pacific-unp-hurt-by-sluggish-volumes-amp-high-debts

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13 replies (most recent on top)

I hope this phuking place absolutely implodes

In the meanwhile let's keep that big boy chugging along.

Getting compensated in stock...

Having the power to make the company take on debt to buy back stock and thus prop up it's value...

Cashing out your artificially inflated stock and leaving the company in debt as you move on...

Nope...not shady at all.

Not like every, but like many, and it ain’t capitalism.

So in other words, UP is like every other large corporation in the United States.

I don't know what this is, but it isn't capitalism.

The foamers will just point out the current stock value and tell you that everything is fine.

Timekeeping denies all the claims at my work location then they keep our xtra boards extremely short and then they cry when our guys lay off in masses over holidays. ive never seen mora so low any point of my two decade career. I remember when this company was a good place to call work not anymore.

Plan on borrowing another 20 billion in 2020 to buy back stock. Soon we will have too much debt and fail

Also those “boutique customers” paid top dollar. They understood what we were doing for them was worth the cost and at the time our service reflected it. Today we don’t have those customers and our service is awful. We won’t get that business back. Fat cat Lisher will leave with his millions still.

Well they have to get it back from somewhere...guess what that means for 2020

They won’t even pay legit time claims anymore. I consider this not being able to pay your bills. They wonder why everyone lays off on the weekends and holidays. it’s because everyone is sick of the games. You don’t pay us the agreed upon wages then don’t expect loyalty simple as that. Happy new year everyone!

@12LWYA9J-kph excellent points. We will soon see more signs of the bubble getting ready to pop. Can't argue with the numbers.

The more freight hauled, The more money you make....
The EVP of Ops loves to talk about doing away with “boutique hauling”. (Smaller customers is what he refers to). PSR put the squeeze and did away with smaller customers. Anyone who has been in business 5 minute knows you have to adjust constantly to your customers’ needs. Volume is down because UP’s turned down the business that they feel doesn’t make them the profit margin they want.
Here’s the rub.. When your companies tracks run through the sierras, and Rocky Mountains and the plains that wash out every year, those smaller customers and volumes equal cash flow. They are harder earned dollars but business none the less.
UP is making their own bed to lay in. Yes they have cut a lot of fat ,but, internally out of the public eye, It is crisis management everyday. Especially Mechanical.

Thread regarding Union Pacific Corp. layoffs

Union Pacific sluggish volumes and high debt levels are concerning

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