With an STB merger refiling for the acquisition of Norfolk Southern anticipated “in the coming weeks,” Union Pacific (UP) posted “a record-breaking year and delivered best-ever safety, service, and operating results in 2025,” UP CEO Jim Vena reported Jan. 27. “Our 2025 reported net income grew 6%, earnings per share increased 8%, and we improved our operating ratio. While we work through the regulatory process to create America’s first transcontinental railroad, our team is focused on driving further safety, service, and operating improvements to support growth.”
The railroad, which connects 23 states, linking major U.S. ports and Mexico gateways, was the second Class I to announce its fourth-quarter and full-year 2025 financial and operations results; CSX reported them Jan. 23.
4Q25 vs. 4Q24 Results
UP’s reported 2025 fourth-quarter net income was $1.8 billion and diluted EPS was $3.11. Results include industrial park land sales of $234 million, increasing diluted EPS $0.30, and $30 million of merger costs, reducing diluted EPS $0.05, according to the railroad. Adjusted fourth-quarter 2025 net income of $1.7 billion, or adjusted diluted EPS of $2.86, it said, compares to adjusted fourth-quarter 2024 net income of $1.8 billion, or adjusted diluted EPS of $2.96.
The railroad reported operating revenue of $6.1 billion, declining 1% from the prior-year period, “driven by lower volume, partially offset by core pricing gains and fuel surcharge revenue.” Revenue carloads, it said, declined 4%. The reported operating ratio came in at 60.5%, 180 basis points worse, and adjusted it was 60.0%, 190 basis points worse, according to UP.
UP reported posting “best-ever quarterly records for freight car velocity and terminal dwell and [a] record fourth quarter for train length and workforce productivity.” According to the railroad, both reportable personal injury rate and reportable derailment rate improved; freight car velocity was 239 daily miles per car, a 9% increase; average terminal dwell was 19.8 hours, a 9% improvement; average train length was 9,729 feet, a 3% increase; and workforce productivity was 1,151 car miles per employee, a 3% improvement year-over-year.
2025 vs. 2024 Results
Reported full-year 2025 net income of $7.1 billion, or diluted EPS of $11.98, compares to full-year 2024 net income of $6.7 billion, or diluted EPS of $11.09, according to UP. Reported full-year net income grew 6% and full-year diluted EPS improved 8%, it said. Adjusted full-year 2025 net income of $6.9 billion, or adjusted diluted EPS of $11.66, compares to adjusted full-year 2024 net income of $6.8 billion, or adjusted diluted EPS of $11.11, with adjusted full-year net income growing 3% and adjusted diluted EPS improving 5%, according to the railroad.
Operating revenue came in at $24.5 billion for 2025, up 1% from 2024, “driven by core pricing gains and higher volume, partially offset by business mix, reduced fuel surcharge revenue, and lower other revenue,” UP reported. Freight revenue excluding fuel surcharge grew 3% and revenue carloads increased 1% from 2024. UP said that the reported operating ratio of 59.8% improved 10 basis points; adjusted, it was 59.3%, a 60 basis points improvement.
UP reported the “best ever full year for safety, freight car velocity, locomotive productivity, terminal dwell, train length, workforce productivity, and fuel consumption rate.” According to the railroad, its reportable personal injury and reportable derailment rates both improved, and the personal injury rate was “industry leading.” In 2025, freight car velocity was 225 daily miles per car, an 8% increase; locomotive productivity was 139 gross ton-miles per horsepower day, up 3%; average terminal dwell was 20.9 hours, an 8% improvement; and workforce productivity was 1,132 car miles per employee, a 7% increase from 2024.
2026 Outlook
Looking ahead, UP said it was “on track with Investor Day targets.” The railroad reported that it would meet “customer demand with strong service” during what it called a “muted economic forecast.” It also reported “pricing dollars in excess of inflation dollars”; “earnings per share growth of mid-single digit, consistent with attaining [a] three-year CAGR target of high-single digit to low-double digit through 2027”; “operating ratio improvement,” with an “industry-leading operating ratio and return on invested capital”; and “continued strong cash generation.” According to UP, it will have a capital plan of $3.3 billion in 2026, and “consistent annual dividend increases.”
Letter to Employees
Jim Vena on Jan. 27 also released a letter to employees highlighting UP priorities for 2026 and beyond, including its planned merger with NS.
“Our first priority is continuing to run a great railroad,” he wrote, in part. “This means building on our safety performance and staying in the lead as the best, with everyone returning home from work in the same condition they left. In service, we delivered what we promised our customers, and we will not lose our focus or strength when it comes to staying fluid and deploying our buffer when needed. Our marketing team is focused on using our great service product to continue growing and winning new business—and we must all do our part by controlling costs and being mindful of unnecessary expenditures. The best way we position ourselves for the future is by delivering exceptional results today.
“Our second priority is working through the regulatory process to create America’s first transcontinental railroad. We are responding to the Surface Transportation Board’s (STB) request for additional information. This is a normal procedural step we have seen in previous acquisitions that were ultimately approved. The STB’s request is focused on three key areas requiring clarification, and our team is already working to prepare that information and refile our application in the coming weeks. We view this as a short-term blip and do not expect a significant change to the timeline; we still target closing in the first half of 2027. We are following the process and doing our part to minimize unnecessary bureaucracy and move with speed.
“This team has done the work to put us in the position of strength we need to become America’s first transcontinental railroad. As you all know, at Union Pacific we like looking at things from a factual point of view instead of a personal point of view. Our customers will see an enhanced service offering that is faster to market and connects the entire United States. This means more opportunity, less costs tied to inventory and assets, and the capability to move more containers off of interstates and city roads and onto our network.
“As you know, New York Dock protection has been imposed in major transactions by the STB before, and we expect them to mandate that as a condition. New York Dock protection is limited by time and maxes out protection in a few years. We have enhanced protection so that every unionized employee working on the day the deal closes will have a job for life. That commitment does not change.
“I am proud of what we accomplished last year. As we work toward combining with Norfolk Southern, we are delivering at the highest levels and aligned on what it takes to win: driving safety, service and operating improvements to support growth—which we did by moving an additional 113,000 carloads compared to 2024.”
Next: Providing More Details to STB
In a post earnings-call conversation with Railway Age, Vena addressed the merger application refiling, following the STB’s unanimous decision earlier this month rejecting, “without prejudice,” the first application as incomplete “because it does not contain certain information required by the Board’s regulations.”
UP will provide detailed information in three key areas, Vena said.
One is market share. “We have provided the information that said this is where we are as the combined railroad,” Vena told Railway Age. “And this is where we’re going to be [in terms of growth]. And we never, ever were going to get to a place that we were going to be higher than like 38% to 42% in the combined real world, with the growth, but they want us now to project market share.” The second area that will be addressed, he said, is the related application for the UP-NS acquisition of control of the Terminal Railroad Association of St. Louis; the STB found it to be “a significant transaction, not a minor transaction” as submitted in the original application. “Even though in the application, we said about the railroad, the TRRA, we knew that we were going to get the over 50% ownership, and we said in the application that we were going to divest to make sure that we did not have over 50%, that we were going to be less than majority owners of the TRRA, they want to have more information,” Vena said. “They want us now to formalize exactly what we would do.” The third area is what Vena called the “red line” document. “Every time you have a merger or you buy a house, you always have conditions,” he said. “If these conditions aren’t met, you get to walk away from the deal. So, with Norfolk Southern we agreed on what our conditions would be, that Union Pacific would have an option to walk away. And really, what that has to do with the merits of a merger, I cannot figure it out … I cannot figure out what that has to do with the merits of a combined railroad, and what we do for customers, what we do for the nation, and what we do for our employees, but they’ve asked for it, so I guess we give it, and they’ll know, the other railroads, where our red line is, and the public on what we’re willing to put up with to be able to close the deal. Seems odd that we have to give that, but they asked for that, and we’ll give it to them.”
While Vena said there isn’t a “definitive date” for refiling, he anticipates “sometime in March.” It’s a “very short delay,” he pointed out. “We put the application in in five months instead of six. So we tried to do that to speed up the process and get it done.”
Vena also told Railway Age that UP’s safety and service in 2025 were among the high points of its fourth-quarter and full-year 2025 report, which the railroad will build on in 2026. In terms of the capex, he said the railroad will continue modernizing locomotives and investing in the physical plant, in efficiency, and in capacity for growth.
TD Cowen Commentary
Steady Execution Amid Pending Refiling
By Jason H. Seidl (Wall Street Contributing Editor), Elliot Alper and Uday Khanapurkar
UP met consensus expectations in Q4 and 2026 earnings guidance was roughly in line with our and consensus forecasts. Core demand trends are currently lackluster, similar to what we heard on our rail panel, though coal offers potential NT upside. All eyes on the STB filing, and UP expects to respond in the next few weeks; management still sees 1H27 timeline. PT to $255 and reiterate Buy.
UNP reported an adj. EPS of $2.86 in 4Q, in line with consensus estimates and slightly ahead of our quarterly target. Adj. OR of 60% was right in line with our forecast. Volume declines of 4% due primarily to difficult comparisons were partially offset by pricing/mix +2.75% in 4Q.
2026 demand commentary pointed to a muted economic forecast with ongoing softness in the industrial economy. Coal should be another tailwind for UP as elevated natural gas prices are expected to drive coal demand, and coal carloadings are +20% YTD with more winter weather events on the horizon. Grain strengths should be visible in 2026 driven by exports and new market expansions. Similar commentary was shared on our railroad roundtable earlier this month, where industry panelists unanimously expect weak core demand trends in 2026. Intermodal outlook was subdued as well, which was shared by UP in the near-term on the international side.
Management expects to respond to the STB in “a few weeks” and will refile their application; UP is still targeting the first half of 2027 but this likely pushes timing out a month, at a minimum. UP is required to submit a letter of refiling intent to the STB by Feb. 17. The STB’s review timeline calls for an approximately 13 month review (including acceptance and comments) but we continue to acknowledge that this could very well take a few months longer realistically given the scale of the proposal.
UP did not shy away from embracing the potential for reciprocal switching but highlighted the importance of the nuances and the complicated nature of it, which can see customer deterioration if not done right. Panelists on our recent call stated that reciprocal switching could prove beneficial for competition but difficult to judge only from the proposed rule making. We believe the proposal is likely unrelated to the ongoing merger review given this is a long-standing issue on the STB docket but could theoretically offset the competitive impacts of consolidation if the final rule is adequately designed.
Earnings guidance in 2026 called for mid-single-digit EPS growth, which calls for approximately $12.58 in 2026 earnings, roughly in line with our $12.55 estimate and consensus of $12.49. We model less than 1% of carloadings growth in 2026 and 140bps of margin improvement. UP spoke to inflation trending upwards and expects 4% rail inflation this year; we also expect UP to not take any chances that could impact service/staffing, given any noteworthy disruptions would not help its case with the STB.
We adjust our 2026 and 2027 EPS estimates to $12.55 from $12.50 and $13.20 from $13.28,
respectively. Continuing to use our merger model valuation, our PT moves to $255. Reiterate
Buy.
For more financial and operations results, visit the Investors section of the UP website.
