Union Pacific (UNP) Q2 2026 earnings summary

Executive summary

• Achieved record financial results in Q2 2026, with net income of $2.0 billion and diluted EPS of $3.36, up 7% year-over-year; adjusted EPS rose 13% to $3.41, driven by strong execution, volume growth, and operational efficiency.

• Operating revenue reached $6.9 billion, up 12% year-over-year, with freight revenue also up 12% to $6.5 billion, supported by higher fuel surcharges and core pricing gains.

• Improved safety, operational fluidity, and productivity, with workforce productivity up 5% and record operational metrics in train length and car velocity.

• Advanced merger milestones with Norfolk Southern, including regulatory progress and a settlement agreement with Canadian National to enhance network competitiveness.

• Raised full-year 2026 EPS growth outlook to high single digits, citing robust first-half performance and improved volume trends.

Financial highlights

• Operating income for Q2 2026 was $2.76 billion, up 9% year-over-year; adjusted operating income up 8%.

• Operating ratio was 59.7% (reported), with an adjusted operating ratio of 59.2%; underlying OR was 58% adjusted for fuel.

• Cash from operations reached $5.5 billion (up 21%), and free cash flow was $1.81 billion after dividends and reinvestment.

• Operating expenses increased 13% year-over-year, mainly from a 63% rise in fuel costs, inflation, and merger/acquisition-related expenses.

• Dividends declared per share increased 3% year-over-year to $1.38 for the quarter.

Outlook and guidance

• Full-year 2026 EPS growth outlook raised to high single digits, consistent with a 3-year CAGR target of high-single to low-double digits through 2027.

• Capital plan set at $3.3 billion for 2026, focusing on network growth, safety, and modernization, with continued annual dividend increases.

• Pricing expected to exceed inflation, with ongoing operating ratio improvement despite margin pressure from volatile fuel prices.

• Anticipate continued strength in domestic intermodal, industrial, and grain segments; coal remains a headwind.

• Share repurchases paused pending Norfolk Southern acquisition; 93.9 million shares remain authorized for repurchase.