The Nasdaq has been relatively flat, the S&P 500 is up 0.3% and the Dow has risen 0.2% 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 climbed 0.4% overall, and these are the biggest movers in the sector so far:
|Company||Market Cap||Percentage Change|
|US Airways (NYSE:LCC)||$1.72 billion||+6.6%|
|Ryanair Holdings plc (Nasdaq:RYAAY)||$8.79 billion||+3.1%|
|AMERCO (Nasdaq:UHAL)||$1.92 billion||+2%|
|Kirby (NYSE:KEX)||$3.05 billion||-1.4%|
|J.B. Hunt Transport Services (Nasdaq:JBHT)||$6.41 billion||-1.3%|
|China Eastern Airlines Corp. Ltd (NYSE:CEA)||$3.84 billion||-1.1%|
|Hub Group (Nasdaq:HUBG)||$1.22 billion||-1.1%|
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US Airways (NYSE:LCC) has moved up 6.6% and is currently trading at $11.29 per share. So far today, the company's volume is 9.7 million shares. This is 1.3 times its average daily volume. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. LCC's debt ratio of 94.5% is fairly high. 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.
Ryanair Holdings plc (Nasdaq:RYAAY) has risen 3.1% to hit a current price of $31.46 per share. At 66,423 shares, the company's volume so far today is in keeping with the average volume over the past three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. RYAAY's P/S ratio of 1.45 is on the high side. 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.
AMERCO (Nasdaq:UHAL) is currently trading at $100.09 per share, a 2% increase. The company is currently trading a volume of 4,218 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 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 is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. UHAL has a high D/E ratio of 162%. This shows that the company's assets are financed primarily through debt. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
At $53.90, Kirby (NYSE:KEX) has slipped 1.4%. The company's volume is currently 173,053 shares for the day, consistent with the volume from yesterday while it was 368,210 shares yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. The P/B ratio for KEX is 1.94, indicating that the stock is trading for more 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: Investment Valuation Ratios: Price/Book Value Ratio
J.B. Hunt Transport Services (Nasdaq:JBHT) is currently trading at a share price of $53.86, a 1.3% decline. The company's volume for the day so far is 866,363 shares. This is 1.3 times its current daily average. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for JBHT is 44.8%. 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.
China Eastern Airlines Corp. Ltd (NYSE:CEA) has decreased to $16.84 per share, a 1.1% fall. So far today, the company's volume is 2,197 shares, 0.2 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. CEA's P/E ratio of 6.5 falls below the industry average of 45.61. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Profit With The Power Of Price-To-Earnings
Falling 1.1%, Hub Group (Nasdaq:HUBG) is currently at a share price of $31.95. So far today, the company's volume is 103,724 shares. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. HUBG has a PEG ratio of 1.39, which is consistent 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.