Freight transportation company Union Pacific (NYSE: UNP) met Wall Street’s revenue expectations in Q1 CY2026, with sales up 3.2% year on year to $6.22 billion. Its non-GAAP profit of $2.93 per share was 2.4% above analysts’ consensus estimates.
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Union Pacific (UNP) Q1 CY2026 Highlights:
- Revenue: $6.22 billion vs analyst estimates of $6.23 billion (3.2% year-on-year growth, in line)
- Adjusted EPS: $2.93 vs analyst estimates of $2.86 (2.4% beat)
- Operating Margin: 39.5%, in line with the same quarter last year
- Free Cash Flow Margin: 24.2%, up from 7.8% in the same quarter last year
- Market Capitalization: $148.1 billion
Company Overview
Part of the transcontinental railroad project, Union Pacific (NYSE: UNP) is a freight transportation company that operates a major railroad network.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Union Pacific grew its sales at a tepid 5.1% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Union Pacific’s recent performance shows its demand has slowed as its annualized revenue growth of 1.2% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Union Pacific grew its revenue by 3.2% year on year, and its $6.22 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.
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Operating Margin
Union Pacific has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 40%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Union Pacific’s operating margin decreased by 2.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, Union Pacific generated an operating margin profit margin of 39.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Union Pacific’s EPS grew at 8.2% compounded annual growth rate over the last five years, higher than its 5.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.
We can take a deeper look into Union Pacific’s earnings quality to better understand the drivers of its performance. A five-year view shows that Union Pacific has repurchased its stock, shrinking its share count by 11.3%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Union Pacific, its two-year annual EPS growth of 6.6% was lower than its five-year trend. We hope its growth can accelerate in the future.
In Q1, Union Pacific reported adjusted EPS of $2.93, up from $2.70 in the same quarter last year. This print beat analysts’ estimates by 2.4%. Over the next 12 months, Wall Street expects Union Pacific’s full-year EPS of $11.90 to grow 7.6%.
Key Takeaways from Union Pacific’s Q1 Results
Revenue was in line and EPS beat. It wasn't a fantastic quarter, but it was solid. The stock traded up 1.7% to $253.53 immediately following the results.
Big picture, is Union Pacific a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
