Union Pacific (UNP)

The sleeper story is that the Canadian National settlement, which the market has treated as a closed, derisking event since Q2, is apparently still being finalized three months later, with Vena now saying it 'should be announced, finalized completely right away'. The headline, a record $3.53 adjusted EPS quarter on 6% volume growth, is real, but it is a volume-and-surcharge story (900bps from fuel surcharge alone) rather than a pricing story, and management pushed the actual rail pricing inflection out to 'first several months of 2027'. The binding constraint right now isn't operational capacity (locomotive buffer, train length, and productivity all look genuinely strong), it's regulatory and negotiating-table bandwidth: a second ex parte request, a surprise critical STB commissioner note, and a CFO exiting mid-merits-phase all add friction the '99.999% sure' rhetoric doesn't fully capture. My view changes if the CN agreement is formally filed with the STB before year-end, or if Q4 shows ex-fuel yields actually inflecting rather than being pushed further into 2027.