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Tickers in this Article: ARII, HOS, GLF, AAWW, KEX, ASR, AIRM
This morning's trading has marked a bad day for the market so far. The Nasdaq has decreased 0.3%; the S&P 500 is trading down 0.4%; and the Dow has slipped 0.5%. 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 0.5%, and its current biggest movers are:
CompanyMarket CapPercentage Change
American Railcar Industries, Inc. (Nasdaq:ARII)$636.1 million-3.5%
Hornbeck Offshore Services, Inc. (NYSE:HOS)$1.5 billion-3.1%
GulfMark Offshore, Inc. (NYSE:GLF)$1.01 billion-2.9%
Atlas Air Worldwide Holdings, Inc. (Nasdaq:AAWW)$1.37 billion-2.5%
Kirby Corporation (NYSE:KEX)$3.01 billion-2.5%
Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR)$2.63 billion-2.3%
Air Methods Corporation (Nasdaq:AIRM)$1.48 billion-2%
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American Railcar Industries (Nasdaq:ARII) is currently trading at a share price of $28.76, a 3.5% decline. At 35,309 shares, the company's volume so far today is 0.3 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. ARII's debt ratio is 56.1%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Currently trading at $41.20 per share, Hornbeck Offshore Services (NYSE:HOS) has fallen 3.1%. So far today, 267,704 shares of the company's stock have changed hands. At this rate, trading activity will likely be down from yesterday when 684,456 shares changed hands. If a stock price moves on high volume, this means that the change is a significant one. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. HOS has a P/B ratio of 1.33 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio

At $36.23, GulfMark Offshore (NYSE:GLF) has slipped 2.9%. With 22,586 shares changing hands so far today, the company's volume is 0.1 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios allow the investor to make a quick determination as to a company's investment value. A price/sales ratio is derived by dividing stock market price by company sales. GLF's P/S ratio of 2.32 is on the high side. This could be a good sign if the share price increases. 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.

Slipping 2.5%, Atlas Air Worldwide Holdings (Nasdaq:AAWW) is currently trading at $50.57 per share. So far today, 106,766 shares have changed hands. A stock's volume conveys how excited investors are about it. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). The P/E ratio for AAWW is 12.9, below the industry average of 18.24. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios

Kirby (NYSE:KEX) has decreased to $52.49 per share, a 2.5% fall. The company's volume is currently 38,389 shares for the day, 0.1 times the current daily average. 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. 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 is a leverage ratio. KEX has a D/E ratio of 51%. 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 Sureste (NYSE:ASR) is down 2.3% to reach $85.66 per share. So far today, the company's volume is 16,197 shares. At this rate, trading activity will likely be down from yesterday when 58,296 shares changed hands. 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. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for ASR is a low 17.8%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.

Air (Nasdaq:AIRM) is currently trading at a share price of $112.44, a 2% decline. The company's volume for the day so far is 18,173 shares, 0.2 times the average volume over the last three months. 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. 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. AIRM has a high capitalization ratio of 58.9%. 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.

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. 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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