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Norfolk Southern and Other Big Movers In Transportation on August 23, 2012
The market has been slipping so far today. The Nasdaq has decreased 0.2%; the S&P 500 has slipped 0.4%; and the Dow is down 0.6%. 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 lagging behind the overall market, down 0.8%, and its current biggest movers are:
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Spirit Airlines (Nasdaq:SAVE) is down 3.2% to reach $19.16 per share. The company's volume for the day so far is 181,968 shares. This is on pace to fall short of yesterday's volume of 749,348 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for SAVE is 1.17, which is relatively high. 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.
At $30.50, Hub Group (Nasdaq:HUBG) has slipped 2.4%. At 128,242 shares, the company's volume so far today is in keeping with its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. HUBG's PEG ratio of 1.39 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.
After a decline of 2.2%, Golar LNG Limited (Nasdaq:GLNG) has hit a share price of $38.57. This morning, the company is trading a volume of 420,943 shares. Volume is an important indicator because it indicates how significant a price shift is. 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 debt-equity (D/E) ratio is a leverage ratio. GLNG's D/E ratio of 203% is on the high side. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Norfolk Southern (NYSE:NSC) has decreased to $73.60 per share, a 1.4% fall. The company's volume for the day so far is 437,840 shares, 0.4 times the average volume over the last three months. A stock's volume conveys how excited investors are about it. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. NSC has a debt ratio of 66.5%, which is on the high side. This means that most of the company's assets are financed through debt. 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.
Costamare (NYSE:CMRE) is up 1.4% to reach a current price of $12.81 per share. So far today, the company's volume is 87,992 shares. This is about the same trading activity as there was yesterday. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. CMRE has a P/E ratio of 9.1, high compared to the industry average of 4.45. 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: Can Investors Trust the P/E Ratio?
Falling 1%, Allegiant Travel (Nasdaq:ALGT) is currently at a share price of $67.16. At 12,369 shares, the company's volume so far today is 0.1 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ALGT's P/B ratio of 3.21 shows that its share price is higher than its book value. 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
After rising 1%, Seaspan (NYSE:SSW) is currently trading at a share price of $16.11. The company is currently trading a volume of 42,586 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. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for SSW is 6.3%. 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: Investment Valuation Ratios: Dividend Yield
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Transportation sector (IYT) is currently lagging behind the overall market, down 0.8%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Spirit Airlines (Nasdaq:SAVE) | $1.44 billion | -3.2% |
| Hub Group (Nasdaq:HUBG) | $1.18 billion | -2.4% |
| Golar LNG Limited (Nasdaq:GLNG) | $3.17 billion | -2.2% |
| Norfolk Southern (NYSE:NSC) | $23.86 billion | -1.4% |
| Costamare (NYSE:CMRE) | $856.3 million | +1.4% |
| Allegiant Travel (Nasdaq:ALGT) | $1.31 billion | -1% |
| Seaspan (NYSE:SSW) | $1 billion | +1% |
Spirit Airlines (Nasdaq:SAVE) is down 3.2% to reach $19.16 per share. The company's volume for the day so far is 181,968 shares. This is on pace to fall short of yesterday's volume of 749,348 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for SAVE is 1.17, which is relatively high. 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.
At $30.50, Hub Group (Nasdaq:HUBG) has slipped 2.4%. At 128,242 shares, the company's volume so far today is in keeping with its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. HUBG's PEG ratio of 1.39 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.
After a decline of 2.2%, Golar LNG Limited (Nasdaq:GLNG) has hit a share price of $38.57. This morning, the company is trading a volume of 420,943 shares. Volume is an important indicator because it indicates how significant a price shift is. 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 debt-equity (D/E) ratio is a leverage ratio. GLNG's D/E ratio of 203% is on the high side. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Norfolk Southern (NYSE:NSC) has decreased to $73.60 per share, a 1.4% fall. The company's volume for the day so far is 437,840 shares, 0.4 times the average volume over the last three months. A stock's volume conveys how excited investors are about it. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. NSC has a debt ratio of 66.5%, which is on the high side. This means that most of the company's assets are financed through debt. 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.
Falling 1%, Allegiant Travel (Nasdaq:ALGT) is currently at a share price of $67.16. At 12,369 shares, the company's volume so far today is 0.1 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ALGT's P/B ratio of 3.21 shows that its share price is higher than its book value. 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
After rising 1%, Seaspan (NYSE:SSW) is currently trading at a share price of $16.11. The company is currently trading a volume of 42,586 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. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for SSW is 6.3%. 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: Investment Valuation Ratios: Dividend Yield
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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