Currently, the Nasdaq is trading up 0.2%, the S&P 500 has remained steady and the Dow is trading down 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) has climbed 0.1% so far today and here are its biggest movers:
|Company||Market Cap||Percentage Change|
|China Southern Airlines Limited (NYSE:ZNH)||$4.85 billion||-3.3%|
|China Eastern Airlines Corp. Ltd (NYSE:CEA)||$3.88 billion||-2.1%|
|Seaspan (NYSE:SSW)||$1.08 billion||-1.9%|
|Copa Holdings (NYSE:CPA)||$3.45 billion||-1.5%|
|Werner Enterprises (Nasdaq:WERN)||$1.7 billion||-1.5%|
|Golar LNG Limited (Nasdaq:GLNG)||$3.24 billion||-1.4%|
|Atlas Air Worldwide Holdings (Nasdaq:AAWW)||$1.4 billion||+1.4%|
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Slipping 3.3%, China Southern Airlines Limited (NYSE:ZNH) is currently trading at $23.89 per share. So far today, the company's volume is 6,466 shares, consistent with its average over the last three months. 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 estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. ZNH's P/S ratio of 0.35 is fairly low. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. 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.
Currently trading at $16.85 per share, China Eastern Airlines Corp. Ltd (NYSE:CEA) has fallen 2.1%. So far today, 3,263 shares have changed hands. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for CEA is 186%. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. 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.
At $16.75, Seaspan (NYSE:SSW) has slipped 1.9%. At 39,689 shares, the company's volume so far today is which is likely to result in less activity than yesterday's volume of 139,024 shares. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. SSW's stock is trading for less than its book value as can be seen from it's P/B value of 0.96. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Copa Holdings (NYSE:CPA) is down 1.5% to reach $76.70 per share. This morning, the company's volume is 63,880 shares. This is 0.2 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. 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. The capitalization ratio for CPA is 42.6%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
After a decline of 1.5%, Werner Enterprises (Nasdaq:WERN) has hit a share price of $22.94. The company's volume is currently 187,084 shares for the day, consistent with its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). The P/E ratio for WERN is 15.4, above the industry average of 12.58. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: The P/E Ratio: A Good Market-Timing Indicator
Golar LNG Limited (Nasdaq:GLNG) has fallen 1.4% and is currently trading at $39.83 per share. This morning, the company is trading a volume of 137,150 shares. Volume indicates the level of interest that investors have in a company at its current price. 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. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. GLNG has a debt ratio of 71.7%, 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.
Atlas Air Worldwide Holdings (Nasdaq:AAWW) has moved up 1.4% and is currently trading at $53.51 per share. This morning, 40,533 shares have been traded, lighter than yesterday's volume of 165,933 shares. 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. Valuation ratios include 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for AAWW is 0.75, which is relatively low. 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. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.