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Tickers in this Article: CEA, SAVE, GLF, ALGT, TAM, GLNG, LFL
The Nasdaq has increased 0.3%, the S&P 500 has decreased 0.2% and the Dow has declined 0.1% after the morning's trading. 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 risen 0.1% so far today and here are its biggest movers:
CompanyMarket CapPercentage Change
China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA)$3.64 billion-3.7%
Spirit Airlines Incorporated (Nasdaq:SAVE)$1.39 billion+2.9%
GulfMark Offshore, Inc. (NYSE:GLF)$950.6 million+2.7%
Allegiant Travel Company (Nasdaq:ALGT)$1.34 billion-2.1%
TAM S.A. (ADR) (NYSE:TAM)$4.09 billion-1.7%
Golar LNG Limited (USA) (Nasdaq:GLNG)$3.04 billion-1.6%
Lan Airlines S.A. (ADR) (NYSE:LFL)$8.86 billion-1.6%
Broker Summary: OptionsXpress Online Trading Platform

China Eastern Airlines Corp. Ltd (NYSE:CEA) has decreased to $15.52 per share, a 3.7% fall. The company's volume is currently 7,029 shares for the day, 0.2 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. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for CEA is 59.7%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. CEA's operating profit margin is -1%. This means that the company came in with a net operating loss in the most recent quarter. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. With a net profit margin of 4.3%, the company has a high one compared to its gross profit margin. Investors in companies with high profit margins can be confident that even if sales dip slightly, profits will remain strong.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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. CEA has a low P/S ratio of 0.28. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.

Spirit Airlines (Nasdaq:SAVE) has moved up 2.9% and is currently trading at $21.08 per share. So far today, the company's volume is 498,045 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. SAVE's gross profit margin is 43%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. With an operating profit margin of 21.4%, SAVE has a low one relative to its gross profit margin. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. The company has a net profit margin of 8.1%.

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 price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. SAVE's P/E ratio of 14.3 is above the industry average of 8.37. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

GulfMark Offshore (NYSE:GLF) has risen 2.7% to hit a current price of $36.40 per share. So far today, the company's volume is 94,092 shares, 0.4 times the average volume over the last three months. 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. GLF has a gross profit margin of 49.7%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. GLF's operating profit margin is 7.4%. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net profit margin for the company is 12.4%.

Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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 capitalizion ratio of 25.4% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. 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.

After a decline of 2.1%, Allegiant Travel (Nasdaq:ALGT) has hit a share price of $68.50. The company is trading at a volume of 49,562 shares. Yesterday, 71,861 shares changed hands. 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. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for ALGT is 38%. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. The operating margin for ALGT is 15.3%, which is low compared its gross profit margin. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company's net profit margin is 6.5%.

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 provides a way of evaluating whether a stock is relatively cheap or expensive. ALGT's P/B ratio of 3.51 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. 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

TAM S.A (NYSE:TAM) is trading at $25.74 per share, down 1.7%. So far today, the company's volume is 30,316 shares, 0.1 times the current daily average. Volume indicates the level of interest that investors have in a company at its current price. Margin ratios highlight companies that are worth further examination. TAM has a gross profit margin of 51.3%. Both TAM's operating and net profit margins are negative. This is because the company reported a net loss and net operating loss in the most recent quarter.

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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. TAM has a debt ratio of 86.2%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. 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.

Slipping 1.6%, Golar LNG Limited (Nasdaq:GLNG) is currently trading at $37.27 per share. The company's volume for the day so far is 125,415 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for GLNG is 203%. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Lan Airlines S.A (NYSE:LFL) is down 1.6% to reach $25.69 per share. The company's volume is currently 1.6 million shares for the day, 1.5 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 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. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for LFL is 26.2%. LFL has an operating profit margin of 23.5% and a net profit margin of 5.2%, both low compared to its gross profit margin.

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. PEG ratio for LFL is 4.23. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

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. 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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