Union Pacific and Norfolk Southern both reported strong second-quarter results on July 23, but their investment cases have diverged sharply. Union Pacific posted operating revenue of $6.9 billion and adjusted earnings per share of $3.41, beating estimates by 3% and 5% respectively, with freight revenue up 12% and its operating ratio improving 10 basis points to 59.2%. Norfolk Southern saw 7% growth in net income and earnings per share, driven by a volume inflection tied to higher energy prices, though its operating ratio rose 210 basis points to 65.5%. Union Pacific now offers higher forward revenue and EBITDA growth rates, while Norfolk Southern’s valuation is tied to a pending acquisition by Union Pacific in a stock-and-cash deal that implies roughly $396 per NSC share, a nearly 12% premium over its current market price of $350.66, reflecting merger-related risks including regulatory approval and an expected close by early 2027.
Norfolk Southern CorporationPending acquisition by Union Pacific at ~12% premium over current price, implying upside for NSC shareholders.
Union Pacific CorporationFreight revenue up 12%, operating ratio improved, beating estimates, indicating strong end-customer demand.