Union Pacific (NYSE: UNP) shares rallied sharply after the railroad giant lifted its full-year earnings growth outlook and reported strong second-quarter results.
The company’s operating revenue climbed 12% year over year to $6.9 billion in the second quarter, signaling robust demand across its freight network.
Excluding fuel surcharges, freight revenue rose 4%, driven by a combination of volume gains and price increases across Union Pacific’s primarily Western U.S. rail operations.
Efficiency improvements are also taking hold, with freight car velocity increasing 5% to 231 daily miles per car during the quarter.
Average terminal dwell time decreased 7% to 19.7 hours, while the fuel consumption rate improved 1% to 1.051 gallons per thousand gross ton-miles.
Higher fuel costs did weigh on the company’s operating ratio, which came in at 59.7% compared to 59% in the same quarter a year ago.
Despite the fuel headwind, Union Pacific’s adjusted net income jumped 12% to $2 billion, with adjusted earnings per share rising 13% to $3.41, aided by ongoing stock buybacks.
Union Pacific now expects high-single-digit earnings-per-share growth in 2026, a meaningful upgrade from its prior forecast of mid-single-digit growth.
CEO Jim Vena addressed the company’s proposed merger with Eastern U.S.-based Norfolk Southern (NYSE: NSC) during a conference call with analysts, expressing confidence in the deal’s momentum.
Vena said the two railroads are progressing through the regulatory review process and reiterated his belief that the combination would strengthen competition and the national supply chain.
“Now, versus almost one year ago when we first announced our plans to merge, we have even more conviction that our transaction is in the public interest and will deliver benefits for our stakeholders, especially our customers,” Vena said.
He added: “The case for our transcontinental railroad is clear, and we’re ready to go,” signaling management’s eagerness to push the deal across the finish line.
The proposed merger between Union Pacific and Norfolk Southern would create a coast-to-coast rail network, combining two of North America’s largest freight operators into a single transcontinental system.
Investors responded positively to both the upgraded earnings outlook and the clarity provided around the merger’s regulatory trajectory heading into the second half of 2026.
