Snapshot
Union Pacific generated revenue of $24.5 billion, operating income of $9.8 billion, net income of $7.1 billion, and diluted EPS of $11.98 in FY2025. Revenue was $6.9 billion, gross profit was $4.0 billion, operating income was $2.8 billion, and net income was $2.0 billion in Q2 FY2026.
- Diluted EPS was $3.36 in Q2 FY2026.
- Free cash flow was $2.2 billion in Q2 FY2026.
- Net debt was $28.2 billion in Q2 FY2026.
- Revenue was $25.4 billion and net income was $7.3 billion on a trailing-twelve-month basis to Q2 FY2026.
Growth
Revenue increased 1.07% in FY2025 against FY2024, reaching $24.5 billion in FY2025. The revenue compound annual growth rate was −0.49% in FY2022–FY2025 and 4.64% in FY2020–FY2025. Diluted EPS increased 8.03% in FY2025 against FY2024 to $11.98 in FY2025, with compound annual growth of 2.24% in FY2022–FY2025 and 8.74% in FY2020–FY2025.
Free cash flow declined 6.70% in FY2025 against FY2024 to $5.5 billion in FY2025; its compound annual growth rate was −1.43% in FY2022–FY2025. In Q2 FY2026, revenue rose 10.4% against Q1 FY2026 and 11.5% against Q2 FY2025, while diluted EPS rose 17.1% and 6.67%, respectively. Free cash flow rose 46.6% against Q1 FY2026 and 57.7% against Q2 FY2025 in Q2 FY2026.
Profitability
Gross margin was 59.6% in FY2025, an increase of 0.4 percentage points in FY2024–FY2025 but a decline of −3.2 percentage points in FY2020–FY2025. Operating margin was 40.2% in FY2025, up 0.1 percentage points in FY2024–FY2025 and 0.1 percentage points in FY2020–FY2025. Pre-tax margin was 37.4% in FY2025, increasing 1.1 percentage points over FY2024–FY2025 and 1.7 percentage points over FY2020–FY2025.
Net margin was 29.1% in FY2025, up 1.3 percentage points in FY2024–FY2025 and 1.7 percentage points in FY2020–FY2025. Return on equity was 40.4%, return on assets was 10.4%, and return on invested capital was 12.6% in FY2025. Operating margin was 40.3% and gross margin was 57.9% in Q2 FY2026.
Balance sheet
Total debt was $31.8 billion and net debt was $30.3 billion in FY2025. Cash and short-term investments were $1.5 billion in FY2025. Shareholders’ equity was $18.5 billion and book value per share was $31.04 in FY2025, while working capital was −$459.0 million in FY2025.
Net debt declined to $28.2 billion in Q2 FY2026 from $29.6 billion in Q1 FY2026 and $31.8 billion in Q2 FY2025. The current ratio was 1.0× and debt to equity was 1.5× in Q2 FY2026. These balance-sheet measures describe the reported debt, liquidity, and equity position; no maturity schedule or interest-coverage measure is reported for Q2 FY2026.
Cash flow & capital return
Operating cash flow was $9.3 billion in FY2025, unchanged in dollar terms from FY2024, while the reported year-over-year change was −0.60% in FY2025 against FY2024. Capital expenditure was $3.8 billion in FY2025, and free cash flow was $5.5 billion in FY2025. Free cash flow represented 77.0% of net income in FY2025.
The company paid $3.2 billion in dividends and completed $2.7 billion of net share repurchases in FY2025, returning $5.9 billion of capital to shareholders in FY2025. Weighted average shares were 595.0 million shares in FY2025, and the share count change was −12.2% in FY2020–FY2025. Operating cash flow was $10.3 billion and free cash flow was $6.5 billion on a trailing-twelve-month basis to Q2 FY2026.
Valuation
As of October 22, 2026, market capitalisation was $177.4 billion. The P/E was 23.2× as of October 22, 2026, above the five-year median of 20.5× and the ten-year median of 20.3× as of October 22, 2026; it was below the industry median of 27.9× as of October 22, 2026. P/S was 6.7× as of October 22, 2026, above the five-year and ten-year medians of 5.7× and above the industry median of 2.5× as of October 22, 2026.
P/B was 8.3× as of October 22, 2026, below the five-year median of 10.0×, above the ten-year median of 7.8×, and above the industry median of 3.6×. EV/Sales was 7.8× as of October 22, 2026, above the five-year median of 7.0×, the ten-year median of 6.9×, and the industry median of 4.6×. EV/Cash flow was 30.6× as of October 22, 2026, above both reported historical medians.
What changed since last quarter
Revenue was $6.9 billion in Q2 FY2026, up 10.4% against Q1 FY2026 and 11.5% against Q2 FY2025. Diluted EPS was $3.36 in Q2 FY2026, up 17.1% against Q1 FY2026 and 6.67% against Q2 FY2025. Free cash flow was $2.2 billion in Q2 FY2026, rising 46.6% against Q1 FY2026 and 57.7% against Q2 FY2025.
Gross margin was 57.9% in Q2 FY2026, declining 1.2 percentage points against Q1 FY2026 and 2.0 percentage points against Q2 FY2025. Operating margin was 40.3% in Q2 FY2026, rising 0.7 percentage points against Q1 FY2026 but declining 0.8 percentage points against Q2 FY2025. Net debt declined by −$1.4 billion against Q1 FY2026 and by −$3.5 billion against Q2 FY2025 in Q2 FY2026. Management’s stated reasons for these Q2 FY2026 changes are not reported.
Open questions
- What factors drove the change in quarterly gross margin?
- How are debt maturities and interest-rate exposure structured?
- What portion of capital spending is directed toward maintenance versus expansion?
- What explains the relationship between revenue growth and free-cash-flow movement?
Sources
- Form 10-Q filed October 22, 2026 — management’s discussion and analysis