On a good day for the market, the Nasdaq has moved up 1.1%, the S&P 500 has risen 1.3% and the Dow has increased 1.4%. 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 up 1.6%, outperforming the market overall. The biggest movers in the sector so far are:
|Company||Market Cap||Percentage Change|
|Kirby Corporation (NYSE:KEX)||$2.62 billion||+13.9%|
|United Continental Holdings Inc (NYSE:UAL)||$6.78 billion||-6.4%|
|GulfMark Offshore, Inc. (NYSE:GLF)||$943.6 million||+5.6%|
|Canadian Pacific Railway Limited (USA) (NYSE:CP)||$13.32 billion||+3%|
|Copa Holdings, S.A. (NYSE:CPA)||$3.32 billion||+2.7%|
|Union Pacific (NYSE:UNP)||$55.6 billion||+2.5%|
|Canadian National Railway (USA) (NYSE:CNI)||$37.18 billion||+2.3%|
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After a big jump of 13.9%, Kirby (NYSE:KEX) is trading at $53.40 per share. So far today, 942,042 shares of the company's stock have changed hands. Yesterday, volume was only 549,449 shares. Volume is an important indicator because it indicates how significant a price shift is. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. KEX has a P/B ratio of 1.99 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio
United Continental Holdings (NYSE:UAL) has decreased to $19.11 per share, a 6.4% fall. At 5.2 million shares, the company's volume so far today is one times its average over the past three months. In technical analysis, trading volume is used to determine the strength of a market indicator. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 8.11, UAL's P/E ratio of 14.7 is quite high. This could mean that the market is expecting big things over the next few months or years. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
GulfMark Offshore (NYSE:GLF) has moved up 5.6% and is currently trading at $37.13 per share. This morning, the company is trading a volume of 126,587 shares. 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. A company's investment value can be 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. GLF's P/S ratio of 3.17 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Increasing 3%, Canadian Pacific Railway Limited (NYSE:CP) is trading at $80.11 per share. The company's volume is currently 845,335 shares for the day, 1.3 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CP has a debt ratio of 66.1%, which is on the high side. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Copa Holdings (NYSE:CPA) is up 2.7% to reach a current price of $76.99 per share. The company is trading at a volume of 254,709 shares. This is on pace to reach yesterday's trading volume of 443,588 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The D/E ratio for CPA is 74%. 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.
Union Pacific (NYSE:UNP) has increased to a share price of $120.33, a 2.5% rise. The company's volume is currently 809,764 shares for the day, 0.3 times the current three-month average. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. UNP has a capitalization ratio of 31.2%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Canadian National Railway (NYSE:CNI) is currently trading at $87.48 per share, a 2.3% increase. So far today, the company's volume is 342,936 shares. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. The P/B ratio for CNI is 3.47, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Using The Price-To-Book Ratio To Evaluate Companies
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.