AI Takeaway
Union Pacific delivered Q2 FY2026 diluted EPS of $3.36 (+6.7% YoY) on revenue of $6.864B (+11.5% YoY), as strong pricing and freight demand offset a higher operating ratio driven by a 60% jump in fuel prices and Norfolk Southern acquisition-related expenses.
Revenue
$6.86B
++11.54% YoY
EPS (Basic)
$3.36
++6.33% YoY
Operating Income
$2.76B
++9.43% YoY
Filed · Source: SEC EDGAR 10-Q filing
Union Pacific (UNP) reported Q2 FY2026 revenue of $6.86B, up 11.5% year over year. The company posted net income of $1.99B, up 6.2% from a year earlier, with diluted EPS of $3.36.
Freight revenues increased 12% in Q2 2026 to $6,518M from $5,843M, driven by higher fuel surcharge revenues (up to $1.0B from $569M), 2% carload growth, and core pricing gains, partially offset by unfavorable business mix from higher domestic intermodal (up 19%) which carries lower average revenue per car. Coal carloads declined 17% and international intermodal declined 14%.
Source: 10-Q Item 2 MD&A
Operating income increased 9% to $2.8B, but the operating ratio of 59.7% deteriorated 0.7 points versus Q2 2025's 59.0%, primarily due to a 60% YoY increase in average locomotive diesel fuel price ($3.86/gallon vs $2.42/gallon) and acquisition-related expenses tied to the pending Norfolk Southern merger.
Source: 10-Q Item 2 MD&A
The company paused share repurchases (buybacks fell to just $26M YTD from $2,679M prior year) as part of the pending Norfolk Southern acquisition announced in Q3 2025, and incurred acquisition-related expenses that contributed to higher purchased services and materials costs.
Source: 10-Q Item 2 MD&A
Key operating metrics improved with freight car velocity up 5%, terminal dwell improved 7%, workforce productivity up 5%, and train length up 2% to 9,890 feet, reflecting efficient asset utilization even as total average employees declined 3% to 28,786.
Source: 10-Q Item 2 MD&A
Free cash flow (non-GAAP) increased to $1,812M YTD from $1,105M in the prior year period, and the cash flow conversion rate improved to 100% from 77%, reflecting higher operating cash flow of $5,516M and lower income taxes paid.
Source: 10-Q Item 2 MD&A
Locomotive diesel fuel prices averaged $3.86 per gallon in Q2 2026 versus $2.42 in Q2 2025, a 60% increase driven by supply chain pressures, which was the primary driver of the 0.7-point deterioration in operating ratio despite fuel surcharge recovery mechanisms.
Source: 10-Q Item 2 MD&A
The company has a pending acquisition of Norfolk Southern (merger agreement dated July 28, 2025) that has resulted in acquisition-related expenses increasing operating costs and a pause on share repurchases, with completion and integration risk not yet resolved as of this filing.
Source: 10-Q Item 2 MD&A
Total contractual debt obligations are $57,309M with $30,327M in reported debt and a Debt/Equity ratio of 2.44; the company relies on a $2.0B revolving credit facility and $600M Receivables Facility for backstop liquidity while managing large upcoming debt maturities including $47,667M due after 2030.
Source: 10-Q Item 2 MD&A / Balance Sheet (XBRL)
Coal and renewables carloads declined 17% and international intermodal carloads declined 14% in Q2 2026, reflecting structural demand shifts (lower natural gas prices, milder weather, reduced West Coast imports) that could continue to pressure the higher-margin commodity mix.
Source: 10-Q Item 2 MD&A
Current liabilities ($5,612M) slightly exceed current assets ($5,533M), producing a current ratio of 0.99, meaning the company relies on continued strong operating cash flow generation rather than balance-sheet liquidity to meet near-term obligations.
Source: 10-Q Balance Sheet (XBRL)
Reported EPS of $3.41 versus the $3.28 analyst consensus — a +4.1% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.86B | $6.15B | +11.54% |
Operating Income | $2.76B | $2.52B | +9.43% |
Net Income | $1.99B | $1.88B | +6.24% |
EPS (Basic) | $3.36 | $3.16 | +6.33% |
EPS (Diluted) | $3.36 | $3.15 | +6.67% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $71.21B | $68.58B | +3.84% |
Current Assets | $5.53B | $4.18B | +32.27% |
Total Liabilities | $50.54B | $52.32B | -3.40% |
Current Liabilities | $5.61B | $6.45B | -13.02% |
Stockholders' Equity | $20.67B | $16.26B | +27.16% |
Cash & Equivalents | $1.61B | $1.06B | +52.26% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $5.52B | $4.54B | +21.42% |
Investing Cash FlowYTD | $-2.06B | $-1.84B | -12.23% |
Financing Cash FlowYTD | $-3.11B | $-2.65B | -17.37% |
Dividends PaidYTD | $1.64B | $1.6B | +2.56% |
Share BuybacksYTD | $26M | $2.68B | -99.03% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 40.3% | 41.0% | -0.78% |
Net Margin | 29.0% | — | — |
ROE | 9.6% | — | — |
ROA | 2.8% | — | — |
Current Ratio | $0.986 | — | — |
Debt to Equity | $2.445 | — | — |
Expected release date, analyst estimates & what to watch
Union Pacific delivered solid Q1 2026 results with revenue up 3.2% to $6.22B and net income up 4.6% to $1.70B, while maintaining a best-in-class operating margin near 39.5% and generating $2.44B in operating cash flow.
Union Pacific delivered solid FY2025 results with revenue up 1.1% to $24.51B, net income surging 5.8% to $7.14B, and EPS growing 8.1% to $12.00, supported by disciplined cost management and aggressive capital returns to shareholders.
Other companies in Rail Transportation
The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this data. However, UNP reported diluted EPS of $3.36, up 6.7% YoY from $3.15, and revenue of $6.864B, up 11.5% YoY, both showing solid growth.
The operating ratio deteriorated 0.7 points to 59.7% mainly because locomotive diesel fuel prices jumped 60% YoY to $3.86/gallon, alongside acquisition-related expenses tied to the pending Norfolk Southern merger, which together outweighed core pricing gains and productivity initiatives.
The pending Norfolk Southern acquisition (announced July 2025) led Union Pacific to pause share buybacks, causing repurchases to fall to just $26M YTD from $2,679M a year earlier, and generated acquisition-related expenses that added to operating costs, per Note 18 of the filing.
Total operating revenue grew 11.5% YoY to $6.864B, with freight revenue up 12% to $6,518M driven by higher fuel surcharge revenues, 2% carload volume growth, and core pricing gains, partially offset by an unfavorable shift toward lower-revenue domestic intermodal shipments.
Union Pacific shows solid profitability with a 40.25% operating margin and 29.04% net margin, strong free cash flow of $1,812M YTD (up from $1,105M), and improved leverage with adjusted debt/adjusted EBITDA of 2.5x versus 2.7x at year-end 2025, though its current ratio of 0.99 indicates tight short-term liquidity typical for capital-intensive railroads.