Union Pacific Corporation (UNP) delivered a mixed bag of results on Tuesday, reporting fourth-quarter earnings that technically missed the mark even as the railroad operator showed it's getting better at moving freight around the country.

The company posted net income of $1.8 billion, or $3.11 per diluted share. On an adjusted basis, diluted EPS came in at $2.86, falling just a penny short of the analyst consensus of $2.87. Operating revenue slipped 1% to $6.09 billion, also missing the Street's $6.12 billion estimate.

The Efficiency Picture Gets Complicated

Here's where things get interesting. Union Pacific's operating ratio—a key measure of efficiency where lower is better—came in at 60.5%, which was 180 basis points worse year-over-year. The adjusted operating ratio of 60.0% deteriorated by 190 basis points.

But dig into the operational metrics and you'll see a different story. Freight car velocity jumped 9% to 239 daily miles per car, meaning trains are moving faster. Average terminal dwell time fell 9% to 19.8 hours, indicating freight isn't sitting around waiting as long. Workforce productivity improved 3% to 1,151 car miles per employee, while locomotive productivity increased 4% to 141 gross ton-miles per horsepower day. Even train length grew 3% to 9,729 feet. Safety metrics improved across the board too.

Revenue By The Numbers

Freight revenue excluding fuel surcharges actually grew 3%. The Bulk segment delivered 3% revenue growth, powered by a substantial 23% surge in Coal & renewables revenue, though Grain & grain products revenue declined 2%. The Industrial segment eked out 1% growth. The Premium segment took the biggest hit with a 6% revenue decline, dragged down by a 9% drop in Intermodal revenue.

CEO Jim Vena acknowledged the company is navigating regulatory processes to potentially form "the nation's first transcontinental railroad"—a reference to their proposed merger activities. Meanwhile, he emphasized the team remains focused on enhancing safety, service, and operational performance to support future growth.

Looking Ahead

Union Pacific maintained its 2026 outlook for EPS growth consistent with hitting its three-year compound annual growth rate target of high-single digit to low-double digit through 2027. The company plans to spend $3.3 billion on capital investments.

Shares of Union Pacific were up 1.13% at $233.49 following the earnings release.