Why Union Pacific Shares Dropped 10.9% in February
Shares of railroad giant Union Pacific (NYSE: UNP) fell 10.9% in February, according to data provided by S&P Global Market Intelligence. As if weak commodity markets weren't enough, the COVID-19 coronavirus outbreak has triggered fears of business conditions worsening. With Union Pacific's CEO Lance M. Fritz now also co-chairing a COVID-19 task force formed by The Business Roundtable, investors believe the concerns are real.
Union Pacific reported a 10% year-over-year drop each in operating revenue and net income for the fourth quarter in the third week of January, but that didn't hurt the stock's price. One reason is the company's operating ratio, which hit a record fourth-quarter low of 59.7%. As the operating ratio measures a railroad's operating expenses versus its revenue, a lower ratio is better.
Union Pacific shares were, in fact, holding up strong until the broader market sell-off mid-February. There's no clarity yet what impact the coronavirus outbreak is having or could have on rail volumes, but there's no denying that volumes are already on the lower side.
Source Fool.com
