Will Union Pacific (UNP) Disappoint This Quarter? - Analyst Blog

Union Pacific Corporation UNP is set to release first-quarter 2014 results before the opening bell on April 17, 2014.

Last quarter, the company's reported earnings were ahead of our estimate. Let's see how things are shaping up for this announcement.

Factors to Influence This Quarter

Union Pacific is expected to benefit from growth in chemicals, intermodal industrial and agricultural segments. Further, the company's revenues are poised to benefit from the expected growth in shipment related to automotive, petrochemicals, housing and grains. Additionally, strong crude-by-rail and the domestic highway conversion are also likely to bolster the company's long-term prospects.

However, Union Pacific expects a slow improvement in economy, which could mar its 2014 performance, particularly in the domestic market. Fierce competition along with challenges in the coal business is anticipated to weigh on the company's coal shipments in 2014, offsetting the positive impacts of the other products lines.

Earnings Whispers

Our proven model does not conclusively show that Union Pacific is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks Rank: Union Pacific carries a Zacks Rank #3 (Hold).

Zacks ESP: The Most Accurate estimate stands at $2.35 while the Zacks Consensus Estimate is pegged at $2.37, resulting in an Earnings ESP of -0.84% for Union Pacific. This makes surprise prediction difficult for us so we caution investors against the stock going into the earnings announcement.

Other Stocks to Consider

Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Ryder Systems Inc. R with Earnings ESP of +1.15% and Zacks Rank #2 (Buy).

Echo Global Logistics Inc. ECHO with Earnings ESP of +9.09% and Zacks Rank #3.

FedEx Corp. FDX with Earnings ESP of +0.86% and Zacks Rank #3.