Filed Under: ,
Tickers in this Article: SAVE, TK, ZNH, AAWW, MINI, HII, AIRM
It's been a bad day for the market after the morning's trading. The Nasdaq is down 0.2%; the S&P 500 has slipped 0.2%; and the Dow has decreased 0.2%. 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 currently ahead of the overall market, down only 0.2%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Spirit Airlines Incorporated (Nasdaq:SAVE)$1.46 billion-3.6%
Teekay Corporation (NYSE:TK)$2.24 billion-3.5%
China Southern Airlines Limited (ADR) (NYSE:ZNH)$4.67 billion+2.7%
Atlas Air Worldwide Holdings, Inc. (Nasdaq:AAWW)$1.38 billion-2.1%
Mobile Mini Inc (Nasdaq:MINI)$800.6 million+1.5%
Huntington Ingalls Industries Inc (NYSE:HII)$2.04 billion-1.4%
Air Methods Corporation (Nasdaq:AIRM)$1.47 billion-1.3%
Beginner's Guide To Thinkorswim Trading Platform

Spirit Airlines (Nasdaq:SAVE) has decreased to $19.39 per share, a 3.6% fall. So far today, the company's volume is 180,149 shares, 0.2 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. 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. 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. SAVE has a PEG ratio of 0.42. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Slipping 3.5%, Teekay (NYSE:TK) is currently trading at $31.30 per share. The company is currently trading a volume of 257,152 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. TK's stock is trading for more than its book value with a P/B ratio of 1.55. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

China Southern Airlines Limited (NYSE:ZNH) has risen 2.7% to hit a current price of $24.45 per share. At 2,835 shares, the company's volume so far today is 0.2 times its average over the past three months. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. ZNH has a dividend yield of 6%. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn

Falling 2.1%, Atlas Air Worldwide Holdings (Nasdaq:AAWW) is currently at a share price of $51.03. The company's volume for the day so far is 81,485 shares. At this rate, trading activity will likely be down from yesterday when 256,064 shares changed hands. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. AAWW has a P/S ratio of 0.75, on the low end. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

After an increase of 1.5%, Mobile Mini (Nasdaq:MINI) has reached a current price of $17.77. The company's volume is currently 134,407 shares for the day, consistent with its current daily average. Volume indicates the level of interest that investors have in a company at its current price. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. MINI has a debt ratio of 55%. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

Huntington Ingalls Industries (NYSE:HII) has fallen 1.4% and is currently trading at $40.63 per share. The company's volume for the day so far is 237,370 shares. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. HII's capitalization ratio of 66.5% is relatively high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

At $112.70, Air (Nasdaq:AIRM) has slipped 1.3%. So far today, the company's volume is 19,122 shares, 0.2 times its current three-month average. 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. 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. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. AIRM's PEG ratio of 1.14 is in line with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.

comments powered by Disqus

Trading Center