Seeking Alpha
What is your profession? ×
, Estimize (156 clicks)
Hedge fund trader, long/short equity
Profile| Send Message|
( followers)

Union Pacific Corp. (NYSE:UNP) is set to report FQ4 2013 earnings before the market opens on Thursday, January 23. Railroad stocks have been hot over the past year and Union Pacific is no exception. In 2013 Union Pacific stock was up over 25%. Over the past 2 years Union Pacific has grown its profit and revenue year-over-year in every quarter. Last quarter UNP reported 13% year-over-year profit growth and 4% yoy revenue growth. This quarter the buy-side is expecting another quarter of growth from UNP.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.image

The current Wall Street consensus expectation is for Union Pacific to report $2.49 EPS and $5.578B revenue, while the current consensus from 13 Buy Side and Independent contributing analysts is $2.49 EPS and $5.599B revenue. This quarter the buy-side as represented by the community is expecting Union Pacific to beat the Wall Street consensus on revenue and report in-line on profit.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller than usual differential between the 2 groups' forecasts.

Over the past 4 quarters the Estimize consensus for EPS was more accurate than Wall Street 3 times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus. image

The distribution of estimates published by analysts on Estimize range from $2.45 to $2.53 EPS and $5.568B to $5.650B in revenues. This quarter we're seeing a moderate distribution of estimates compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling the potential for greater volatility post earnings, a smaller vice versa.image

This quarter we saw significant downward analyst estimate revisions on Union Pacific. The Wall Street EPS consensus decreased from $2.57 to $2.49, while the EPS forecast from fell from $2.52 to $2.49. The Wall Street revenue consensus dropped from $5.700B to $5.578B. The Estimize revenue consensus also decreased from $5.627B to $5.599B at the end of the quarter. Timeliness is correlated with accuracy, and a falling community consensus going into a report is often a bearish indicator. image

The analyst with the highest estimate confidence rating this quarter is arfang, who projects $2.52 EPS and $5.640B in revenue. In the Winter 2014 season, arfang is currently ranked as the 229th best analyst and is ranked 210th overall among over 3,450 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst agrees with Estimize that Union Pacific will beat the Street on revenue, but arfang additionally forecasting a 3c per share beat on profit.

This quarter analysts on the platform are expecting Union Pacific to report in line with Wall Street expectations on profit but exceed on revenue. The expectations are high as it is for Union Pacific, so if the railroad company can manage to report above the bar that's been set we could see the stock price take off.