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Tickers in this Article: LCC, ZNH, CPA, UTIW, AIRM, ARII, PAC
After the morning's trading, the Nasdaq is down 0.2%, the S&P 500 is trading up 0.3% and the Dow has remained steady. 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.

These are the biggest movers in the Transportation sector (IYT) (+0.5%):
CompanyMarket CapPercentage Change
US Airways (NYSE:LCC)$1.85 billion+5.5%
China Southern Airlines Limited (NYSE:ZNH)$4.17 billion+3.6%
Copa Holdings (NYSE:CPA)$3.53 billion+3.1%
UTi Worldwide (Nasdaq:UTIW)$1.51 billion-2.7%
Air (Nasdaq:AIRM)$1.5 billion-2.6%
American Railcar Industries (Nasdaq:ARII)$643.6 million+2.5%
Grupo Aeroportuario del Pacifico (NYSE:PAC)$2.25 billion+2.5%
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US Airways (NYSE:LCC) has increased to a share price of $12.05, a 5.5% rise. The company's volume for the morning is 3.7 million shares. This is consistent with its current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). LCC has a PEG ratio of 0.08. 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.

Rising 3.6%, China Southern Airlines Limited (NYSE:ZNH) is currently trading at $21.97 per share. At 13,149 shares, the company's volume so far today is. If a stock price makes a big move up or down, volume lets us know the significance of that move. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. ZNH's stock is trading for less than its book value as can be seen from it's P/B value of 0.84. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. 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: How Buybacks Warps The Price-To-Book Ratio

Copa Holdings (NYSE:CPA) is currently trading at $82.17 per share, a 3.1% increase. This morning, the company is trading a volume of 78,824 shares. 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. 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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. CPA's dividend yield is 2.6%. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Due Diligence On Dividends

At $14.16, UTi Worldwide (Nasdaq:UTIW) has slipped 2.7%. At 541,300 shares, the company's volume so far today is 1.6 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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. UTIW has a low P/S ratio of 0.35. Low P/S ratios can indicate unrecognized value potential - so long as other criteria like high profit margins, low debt levels and growth prospects are in place. 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.

After a decline of 2.6%, Air (Nasdaq:AIRM) has hit a share price of $113.71. The company's volume for the day so far is 90,105 shares. This is 1.3 times its current daily average. 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. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. AIRM's debt ratio of 68.3% is fairly high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. 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.

American Railcar Industries (Nasdaq:ARII) has risen 2.5% to hit a current price of $30.89 per share. This morning, 43,191 shares have been traded, with trading activity in keeping with yesterday's. The trading volume for a stock indicates the level of investor interest. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for ARII is 82%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Grupo Aeroportuario del Pacifico (NYSE:PAC) has moved up 2.5% and is currently trading at $41.16 per share. The company's volume for the day so far is 8,380 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. PAC's capitalization ratio is 5.8%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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