Wall Street got out to a slow start on Wednesday morning, with stock market indexes opening very slightly lower. Most investors are paying closest attention to the Federal Reserve, which concludes a two-day monetary policy meeting later this afternoon. Economists broadly expect another modest increase in interest rates as the central bank attempts to bring inflationary pressures even further under control.
A number of high-profile stocks have released their quarterly financial reports this week, and it's been tough to keep up with all the news. But shareholders in Union Pacific (UNP -0.13%) and Vicor (VICR -3.67%) have been quite pleased with the latest news that their companies reported. Here's everything you need to know in order to get these two stocks back on your radar.
Union Pacific chugs ahead
Shares of Union Pacific climbed more than 11% on Wednesday morning. The railroad giant's second-quarter financial results weren't all that strong, but it did give in to pressure from institutional investors to bring on a new CEO whom they wanted to see lead the company forward.
Key metrics reflected industry weakness. Operating revenue fell 5% year over year to $5.96 billion. Expenses fell only marginally, and that led to a drop of 14% in net income to $1.57 billion, working out to $2.57 per share in earnings. Strength in automotive shipment volumes wasn't enough to offset weakness in several areas, including forest products, fertilizer, and food and refrigerated products. Intermodal revenue and volume also fell sharply.
The railroad also characterized its outlook for 2023 as a whole as challenging, with weak demand and a tough cost environment combining to limit growth. Union Pacific has concentrating on building productivity levels back up, but it'll take time to mount a full recovery.
What had investors excited, though, was news that Jim Vena will become CEO in mid-August. With 40 years of railroad experience including having been Union Pacific's chief operating officer in 2019 and 2020, Vena has the confidence of institutional investors, and that should help improve the railroad's chances of returning to its former glory.
Vicor rides AI excitement higher
The gains were even more extensive for Vicor, whose shares jumped more than 45%. The maker of power components and systems reported second-quarter financial results that showed how the company is tapping into strong demand for its products for use in high-performance computing and artificial intelligence (AI) applications.
On its face, Vicor's sales growth didn't seem to warrant such a strong move higher in its share price. Revenue climbed 4.5% year over year to $106.7 million in the second quarter. However, a big jump in margin performance led net income to soar roughly 60% to $17.1 million, working out to $0.38 per share. Operating cash flow showed even bigger percentage gains.
Yet CEO Patrizio Vinciarelli noted that bookings in the quarter were weak because Vicor anticipates its production release of an AI-based platform using a lateral power distribution network to ramp up in the fourth quarter. The product will dramatically reduce power consumption from using high-performance computing processors for running heavy workloads. This initial product will use 4G technology, but Vicor is also looking at 5G architecture that should allow for even higher density and scalability for AI applications.
Investors like what Vicor brings to the table, and they're looking for big growth ahead. If its new products grab the attention of AI companies, then Vicor could easily tap into the strong upward trend.
