UNP · Q2 2026 Earnings

Bullish

Union Pacific Corporation

Reported July 23, 2026

30-second summary

30-second take: Revenue grew 12% YoY to $6.86B (beat consensus $6.67B by 2.9%) with adjusted operating ratio of 59.2% and GAAP EPS of $3.36 (beat $3.19 by 7%). The pressured quarter management flagged in Q1 came in clean — adjusted OR held sub-60% against April diesel above $4/gal, intermodal reversed from -6% to +26%, and the $3.3B FY2026 capex plan reappeared alongside language shifting from "consistent with attaining" the 3-year CAGR to "reported EPS growth increased to high-single digit." The buried tension: coal & renewables turned -4% (from +17% in Q1) and three prior cost markers — fuel assumption, comp growth, coal optimism — quietly disappeared from disclosure.

Headline numbers

EPS

Q2 FY2026

$3.41

+7.0% vs est.

Revenue

Q2 FY2026

$6.86B

+12.0% YoY

+2.9% vs est.

Operating margin

Q2 FY2026

40.3%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$6.86B	$6.15B	+11.5%	$6.22B	+10.4%
EPS	$3.41	$3.03	+12.5%	$2.93	+16.4%
Operating margin	40.3%	41.0%	-70bps	39.5%	+80bps

Guidance

Company raised full-year EPS growth narrative from mid-single digit (Q1 actual) to high-single digit, with mixed economic backdrop supporting pricing power; withdrew commodity fuel and labor cost guidance.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
EPS (GAAP)	Q2 FY2026	—	3.36	+7% above consensus estimate	Beat
Revenue	Q2 FY2026	—	6.864	+2.9% above consensus estimate	Beat

New guidance

Metric	Period	Guide	YoY
Capital Plan	FY 2026	$3.3 billion	—
Dividend Policy	FY 2026	Consistent annual dividend increases	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
3-year EPS CAGR (through 2027)	FY 2026	high-single to low-double digit	high-single to low-double digit; reported earnings per share growth increased to high-single digit	language upgraded from 'consistent with attaining' to 'increased to'; demonstrates acceleration vs prior quarter's mid-single digit Q1 EPS growth	Raised
Economic Outlook	FY 2026	muted economic forecast	mixed economic forecast	language shift from 'muted' to 'mixed'	Raised
Coal & Renewables Outlook	FY 2026	expect four-year coal results to be positive; remain optimistic about coal's potential despite current natural gas pricing	Withdrawn — no replacement	—	Withdrawn
Diesel Fuel Price Assumption	FY 2026	likely to average over $4 per gallon for 2026	Withdrawn — no replacement	—	Withdrawn
Compensation & Benefits per Employee Growth	FY 2026	4% to 5% increase expected	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Operating Ratio (Affirmed; industry-leading operating ratio and return on invested capital)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Bulk	$2.043B	$1.901B	+7.5%
Industrial	$2.386B	$2.212B	+7.9%
Premium	$2.089B	$1.73B	+20.8%
Intermodal	$1.386B	$1.098B	+26.2%
Grain & grain products	$1.106B	—	+15.0%
Coal & renewables	$0.448B	$0.469B	-4.5%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Operating Ratio	59.7%	59.0%	—
Adjusted Operating Ratio	59.2%	58.1%	—
Freight Revenue Growth (excluding fuel)	4%	—	—
Freight car velocity	231 daily miles per car	—	—
Average terminal dwell time	19.7 hours	—	—
Locomotive productivity	142 GTMs per horsepower day	—	—
Workforce productivity	1,176 car miles per employee	—	—
Fuel consumption rate	1.051 gallons per thousand GTMs	—	—

Management tone

Narrative arc: Q3 operational records with volume hedge → Q4 explicit step-down and pricing lever abandonment → Q1 pricing restored, fuel emerges → Q2 pressured quarter absorbed cleanly, EPS narrative upgraded.

Three quarters ago management framed FY2026 EPS as "mid single digit" and asked investors to underwrite a back-half-loaded 2027 to hit the 3-year CAGR. This quarter the press release language shifted to "Reported earnings per share growth increased to high-single digit; consistent with attaining 3-year CAGR target of high-single to low-double digit through 2027." The word "increased" is doing the work — the Q4 framework of mid-single-digit is being retired in favor of high-single-digit inside the same CAGR envelope. The math tension flagged at Q4 (back-half-loaded 2027) has meaningfully eased; the standalone EPS trajectory is now positioned inside the CAGR range rather than at the low end of it.

The macro framing softened for the second consecutive quarter. Q4 language was "our current plans do not anticipate a significant economic upswing"; Q1 became "muted"; this quarter is "mixed economic forecast." This is not full risk-on framing — "mixed" is still hedged — but the trajectory across three quarters is unambiguously toward less pessimism. Combined with the volume mix inversion (premium and intermodal from double-digit declines to double-digit gains), management is describing a demand backdrop that has actually improved, not just stopped worsening.

The pricing narrative held the restoration achieved in Q1. Q4 was the quarter Jennifer said "price may not be a driver of our improving margins in 2026"; Q1 reverted to "pricing dollars in excess of inflation dollars"; this quarter maintains the formulation verbatim. What was a Q4 tone reversal has now hardened into a two-quarter consistent frame — the pricing lever is back and management is not walking it back.

The disclosure retreats — diesel assumption, comp growth range, coal optimism — are the third narrative in this print. Q1's most candid line was Jennifer's "our original diesel fuel estimate of $2.35 per gallon...is now much harder to predict." The Q2 answer to that admission is to stop disclosing the estimate at all. The same logic applied to the 4-5% comp range and the four-year coal outlook removes three data points investors used to triangulate margin math. Against an upgraded EPS narrative, this is the kind of asymmetric disclosure trade that deserves attention — favorable framings retained, quantitative anchors that could go against the story removed.

Answers to last quarter's watch list

Q2 FY2026 adjusted OR with full diesel headwind absorbed — Cleanly resolved. Adjusted OR printed 59.2% against April diesel above $4/gal, 70bps better than Q1's 59.9% and holding well below the 60% threshold. Reported OR of 59.7% is also sub-60%. This is the strongest possible validation of the productivity/pricing offset thesis and the single most important data point in the print — the "most pressured quarter" of FY2026 came in better than the quarter that preceded it. Status: Resolved positively

Whether the $3.3B FY2026 capex plan reappears, gets re-baselined, or stays withdrawn — It reappeared, at the same $3.3B number disclosed in Q4 and withdrawn in Q1. The silent withdrawal in Q1 turned out to be a one-quarter disclosure gap rather than an active reconsideration of spending shape. Status: Resolved positively

Coal & renewables deceleration — Resolved to the wrong side. The segment printed -4% YoY after +17% in Q1, +23% in Q4, and +16% in Q3 — the deceleration went through zero, not toward it, in a single quarter. Compounding the signal, management withdrew the "four-year coal results positive" outlook entirely from disclosure. The segment that was carrying bulk growth for three quarters has just inverted. Status: Resolved negatively

STB process markers between now and Q2 FY2027 expected approval — The press release contains no STB commentary and the transcript is not available for this brief. No second incremental information request or hearing schedule slip has surfaced from the print itself. Status: Continue monitoring

Buyback resumption or formal pause confirmation — The press release does not disclose buyback activity or formal policy on the pause. Dividend policy language ("consistent annual dividend increases") is affirmed but is not the question. Continued silence on repurchases six months into the cash-preservation posture is the outcome flagged as worst-case. Status: Continue monitoring

What to watch into next quarter

Whether adjusted OR holds sub-60% for a third consecutive quarter — Q2 FY2026's 59.2% adjusted OR against April diesel above $4/gal is the productivity/pricing thesis proven at its stress point. A Q3 print sub-60% on easier fuel and easier volume comps would consolidate the standalone margin narrative; a Q3 above 60% would suggest the Q2 achievement was fuel-normalization dependent rather than structural.

Coal & renewables — bottoming or further deterioration — the -4% Q2 print after three consecutive quarters of double-digit growth is the cleanest tone reversal in the segment stack, and management pulled the "four-year positive" language in the same quarter. Watch whether Q3 stabilizes near zero, worsens toward -10%, or shows the deceleration was one-quarter mix-noise. A second consecutive negative print combined with the withdrawn outlook meaningfully changes the bulk segment thesis.

Whether the withdrawn diesel and comp assumptions reappear in Q3 — three simultaneous disclosure retreats in a quarter of upgraded EPS narrative is the pattern worth watching, not the individual withdrawals. If Q3 restores the diesel assumption and the 4-5% comp range, the Q2 removals were housekeeping; if both stay out, the retreat is deliberate policy.

Intermodal sustainability at +26% growth — the swing from -6% in Q1 to +26% in Q2 is too large to project forward. Watch whether Q3 shows +10-15% (indicating a genuine multi-quarter run) or reverts toward flat (indicating a one-quarter comp/mix effect).

STB process disclosure and buyback resumption — both watch items rolled from Q1 unresolved. A second quarter of silence on either compounds the disclosure gap; explicit updates would be material one-way or the other.

Sources

UNP Q2 FY2026 earnings press release (Form 8-K Ex. 99.1), filed July 23, 2026 — https://www.sec.gov/Archives/edgar/data/100885/000010088526000249/a2026-07x238xkex991earning.htm

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