Both Union PacificUNP and United Parcel ServiceUPS performed better than expected in third-quarter 2026, resulting in an uptick in their respective stock prices post-earnings.
UPS' third-quarter 2026 adjusted earnings of $1.69 per share declined 2.9% year over year but beat the Zacks Consensus Estimate of $1.63. Revenues increased 6.7% to $22.85 billion and surpassed the consensus estimate of $22.25 billion. International revenue per piece climbed 15%, while domestic pricing gains supported performance.
UNP's third-quarter 2026 earnings (excluding 4 cents from non-recurring items) of $3.53 per share beat the Zacks Consensus Estimate of $3.47 and increased 14.6% year over year. Operating revenues of $7.20 billion surpassed the consensus estimate of $7.12 billion and rose 15.3% year over year. Strong volume growth, core pricing gains and higher fuel surcharge revenues boosted results.
For 2026, Union Pacific continues to expect reported earnings per share growth in the high-single digits, consistent with its three-year compound annual growth rate target of high-single-digit to low-double-digit growth through 2027.
UPS Raises Full-Year Guidance
Encouraged by the strong results, United Parcel Service raised its 2026 guidance and now expects consolidated revenues of approximately $92.6 billion, up from the previous projection of $91.2 billion and the current Zacks Consensus Estimate of $91.71 billion.
Adjusted operating profit guidance increased to $8.75 billion from $8.65 billion, while adjusted earnings per share outlook rose to $7.28 from $7.22. The Zacks Consensus Estimate is pegged at $7.19 per share. The company also raised its adjusted free cash flow target to approximately $6.1 billion.
For the fourth quarter, management expects consolidated revenues of approximately $25.7 billion and adjusted operating profit of around $3.3 billion. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $25.52 billion.
UPS Has a Better Earnings Surprise History
UNP's earnings have outshone the Zacks Consensus Estimate in three of the past four quarters, missing the mark on the other occasion. The average earnings beat is 2.4%.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
UPS' earnings beat in the third quarter was the fourth successive one by the parcel delivery company. The average beat is 5.1%.
United Parcel Service Price and EPS Surprise
United Parcel Service price-eps-surprise | United Parcel Service Quote
UPS & UNP's Price Performance, Valuation & Earnings Estimates
Shares of UNP have gained in double digits (% wise) over the past six months. UPS' shares have not performed well compared with UNP, gaining in the low single digits in the same time frame.
6-Month Price Comparison
Image Source: Zacks Investment Research
UNP trades at a forward price-to-sales ratio of 6.34X compared with UPS' 0.96X. Consequently, UNP's shares appear to be more expensive. Union Pacific currently carries a Value Score of D, while United Parcel Service holds a Value Score of B.
See how the Zacks Consensus Estimate for UNP and UPS' earnings has been revised over the past 90 days.
Earnings Estimate Revisions for UNP
Image Source: Zacks Investment Research
Earnings Estimate Revisions for UPS
Image Source: Zacks Investment Research
End Note
Union Pacific's cost-cutting efforts, improving freight demand scenario and shareholder-friendly approach justify its premium valuation. Following a prolonged period of downturn, things appear to be brightening as far as freight demand is concerned.
Highlighting the brightening freight demand scenario, the Cass Freight Shipments Index improved 2.3% month on month in September 2026. This measure has improved month on month in five of the past seven months, which confirms the improving scenario. Additionally, the measure rose 1.9% year over year, marking its second consecutive annual increase following a three-and-a-half-year contraction, the longest such decline on record. This is a huge positive for Union Pacific.
While UPS is largely supported by increased focus on healthcare revenues and efficiencies driven by artificial intelligence, we note that the strategy shift by the shipping giant has resulted in a significant drop in average daily volumes of late.
Owing to the strategic shift, UPS has not increased the quarterly dividend this year, freezing it at $1.64 per quarter ($6.56 annually). UNP's stronger share price performance also indicates that its cost-cutting efforts are translating into tangible benefits. Based on our analysis, UNP appears to be the more attractive option at present. UNP currently carries a Zacks Rank #2 (Buy) and UPS carries a Zacks Rank #3 (Hold).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
