Union Pacific stock goes off the rails again

Union Pacific (UNP) shares are going off the rails Thursday after the transportation company reported a disappointing quarterly profit.

The stock closed down $2.61, or 3.6%, to $71 after the Omaha-based railroad operator reported 19% lower adjusted quarterly profit of $1.31 a share. Those results missed expectations by 7%, says S&P Capital IQ. The company hasn't missed earnings expectations since the first quarter of 2015.

Investors watch the performance of transportation companies and stocks very closely for clues about the economy. If there are fewer goods being transported, that can be a signal to investors that economic activity is slowing down. Shares of Union Pacific are down 36% over the past year and the Dow Jones Transportation index is down 25%. Investors are looking for signs if the stock market's recent woes are just a valuation correction - or a harbinger of an economic slowdown.

Perhaps most troubling is the rapid and steady decline in Union Pacific's revenue over the past five quarters. Revenue during the fourth quarter declined 15.4% from the same period a year ago to $5.2 billion. That's an even larger decline than the 10% drop in revenue in the third quarter.

Investors might hope this is just a railroad problem - and not a sign of a broader slowdown in transportation demand.

Follow Matt Krantz on Twitter @mattkrantz