The market is currently down, with the Nasdaq falling 0.2%, the S&P 500 slipping 0.2% and the Dow declining 0.5%. The transportation sector is a category of stocks relating to the transportation of goods or customers. It is made up of airlines, railroads and trucking companies. The performance of the transportation sector is sensitive to the price of oil. Because operations revolve around the use of vehicles, fuel prices represent a significant cost to transportation companies. As the price of oil rises, transportation companies will be expected to earn less. Inversely, these companies do well when the cost of fuel decreases.

The Transportation sector (IYT) is down 1.1%, underperforming the market overall. The current biggest movers in the sector are:

CompanyMarket CapPercentage Change
Roadrunner Transportation Systems Inc (NYSE:RRTS)$520.6 million-3.7%
Con Way Inc (NYSE:CNW)$2.02 billion-2.8%
US Airways Group (NYSE:LCC)$2.16 billion+2.4%
AMERCO (Nasdaq:UHAL)$1.76 billion+2.4%
GulfMark Offshore, Inc. (NYSE:GLF)$913.3 million+1.8%
Kansas City Southern (NYSE:KSU)$7.65 billion-1.6%
Grupo Aeroportuario del Pacifico (ADR) (NYSE:PAC)$2.21 billion-1.5%
Beginner's Guide To

Roadrunner Transportation Systems (NYSE:RRTS) is down 3.7% to reach $16.26 per share. The company's volume is currently 44,765 shares. Yesterday, 268,588 shares changed hands. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. RRTS has a low gross profit margin of 17.3%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Operating margin for RRTS is 6.3% and net margin is 3.2%, both low relative to its gross margin.

While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. RRTS' capitalization ratio is 29.7%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Con Way (NYSE:CNW) has fallen 2.8% and is currently trading at $35.10 per share. The company's volume is currently 411,101 shares for the day, 0.4 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin analysis is a great way to understand the profitability of companies. CNW's gross profit margin is 61.1%. Compared with its gross profit margin, CNW's operating profit margin of 4.1% and net profit margin of 2% are high.

Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. CNW has a PEG ratio of 1.4, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

After an increase of 2.4%, US Airways (NYSE:LCC) has reached a current price of $13.65. The company's volume for the day so far is 4.5 million shares. A stock's volume conveys how excited investors are about it. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. LCC has a gross profit margin of 48.9%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. LCC has an operating profit margin of 2%. Net profit margin is calculated by dividing net income by sales. Net profit margin for the company is 1.8%.

In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. The P/B ratio for LCC is 11.1, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Using The Price-To-Book Ratio To Evaluate Companies

AMERCO (Nasdaq:UHAL) is up 2.4% to reach a current price of $92.09 per share. At 8,279 shares, the company's volume so far today is 0.3 times the current three-month average. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. UHAL's gross profit margin is 44%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. UHAL's operating profit margin is 11.1%. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. Net margin is 8.2%.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. UHAL has a P/S ratio of 0.83, on the low end. The lower the P/S ratio, the more reasonably price the stock, all else being equal. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

GulfMark Offshore (NYSE:GLF) has risen 1.8% and is currently trading at $34.64 per share. The company's volume for the day so far is 124,935 shares. This is less trading activity than there was yesterday. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Margin ratios highlight companies that are worth further examination. GLF has a gross profit margin of 49.7%. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. Operating profit margin for GLF is 7.4%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company has a net profit margin of 12.4%.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. GLF has a low debt ratio of 37.9%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Kansas City (NYSE:KSU) is currently trading at a share price of $68.47, a 1.6% decline. The company's volume is currently 254,937 shares for the day, 0.3 times its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. KSU's gross profit margin is 59.7%. A company's operating margin is calculated by dividing operating income by revenues. KSU's operating profit margin is 28.8%. Net profit margin compares net income with sales. Net profit margin for the company is 15.8%.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. KSU's P/E ratio of 22.4 is above the industry average of 16.3. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Understanding The P/E Ratio

At $38.85, Grupo Aeroportuario del Pacifico (NYSE:PAC) has slipped 1.5%. The company is currently trading a volume of 2,709 shares. The trading volume for a stock indicates the level of investor interest. Margin analysis is a great way to understand the profitability of companies. PAC's gross profit margin of 80.1% is on the high side. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. PAC has an operating profit margin of 0%. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. The company's net profit margin is 30.1%.

A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. PAC has a low debt-equity ratio of 8%. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

Filed Under: ,
Tickers in this Article: RRTS, CNW, LCC, UHAL, GLF, KSU, PAC

comments powered by Disqus

Trading Center