Union Pacific Gains Most in Month on $9.5 Billion BuybackJames Callan
Union Pacific Corp. rose the most in more than a month after the largest U.S. railroad authorized a buyback plan of as much as $9.5 billion in stock.
The four-year program, which will repurchase as many as 60 million shares, is effective Jan. 1 and replaces the current authorization, Omaha, Nebraska-based Union Pacific said today in a statement. The buyback is equivalent to 13 percent of the current outstanding stock.
While profit has advanced at Union Pacific in every quarter since 2010, a 28 percent gain in the shares this year trails rivals CSX Corp., Norfolk Southern Corp. and Kansas City Southern. Last month, Union Pacific reported third-quarter revenue that trailed analysts’ estimates.
The shares increased 1.4 percent to $160.78 at the close in New York. Union Pacific’s increase for the year is less than the 33 percent advance for the Standard & Poor’s 500 Railroads Index.
Since 2007, Union Pacific has repurchased about 19 percent of its outstanding shares at a total cost of almost $8.6 billion, according to the statement. The company also reported a quarterly dividend of 79 cents a share, payable on Jan. 2, to shareholders of record as of Dec. 3.
U.S. railroads are currently challenged with slumping volumes of fossil fuel as utilities switch to cheaper natural gas. Last quarter, Union Pacific said volume growth from industrial products, automotive, and chemicals was offset by declines in coal, agricultural products and intermodal shipments.