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Transportation Stocks Making Big Moves on July 17, 2012
The Nasdaq is down 0.1%, the S&P 500 has declined 0.1% and the Dow has decreased 0.2% on a bad morning for the market. 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 down 1.6%, underperforming the market overall. The current biggest movers in the sector are:
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J.B. Hunt Transport Services (Nasdaq:JBHT) has fallen 8.3% and is currently trading at $53.50 per share. At three million shares, the company's volume so far today is 3.8 times its 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. JBHT has a gross profit margin of 39%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. JBHT has an operating profit margin of 10%. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company has a net profit margin of 5.9%.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. JBHT's P/E ratio of 25.9 falls below the industry average of 28.51. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Falling 7.9%, Hub Group (Nasdaq:HUBG) is currently at a share price of $31.70. So far today, 431,367 shares of the company's stock have changed hands. Yesterday's volume was only 170,370 shares. The trading volume for a stock indicates the level of investor interest. 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. HUBG has a low gross profit margin of 11.7%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, HUBG's operating profit margin of 3% and net profit margin of 2% are low.
In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. HUBG has a low capitalization ratio of 4.8%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
At $25.77, American Railcar Industries (Nasdaq:ARII) has slipped 4.2%. With 13,183 shares changing hands so far today, the company's volume is 0.2 times the current three-month average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Margin analysis is a great way to understand the profitability of companies. ARII has a low gross profit margin of 17.2%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin for ARII is 13.1% and net margin is 3.5%, both low relative to its gross margin.
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. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ARII's stock is trading for more than its book value with a P/B ratio of 1.71. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
After a decline of 4.1%, Landstar System (Nasdaq:LSTR) has hit a share price of $47.85. So far today, 248,173 shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin ratios highlight companies that are worth further examination. LSTR has a low gross profit margin of 24.1%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. LSTR has an operating profit margin of 6.6% and a net profit margin of 4.4%, both low compared to its gross profit margin.
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 dividend yield is calculated by dividing a company's dividends per share by its stock price. LSTR's dividend yield of 0.4% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn
CH Robinson (Nasdaq:CHRW) is down 2.9% to reach $57.20 per share. The company's volume is currently 788,002 shares for the day, 0.6 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. CHRW has a low gross profit margin of 16.1%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, CHRW's operating profit margin of 6.6% and net profit margin of 4.2% are low.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. CHRW's P/S ratio of 1.02 is on the high side. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Kansas City (NYSE:KSU) is trading at $67.02 per share, down 2.7%. So far today, the company's volume is one million shares. This is more trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. 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. KSU's gross profit margin is 59.7%. A company's operating margin is calculated by dividing operating income by revenues. Operating profit margin for KSU is 28.8%. 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. Net margin is 15.8%.
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 measures the leverage of a company, and a company's leverage is a good way to assess risk. KSU has a debt ratio of 54.7%. 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.
Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is up 2.4% to reach a current price of $4.22 per share. The company's volume for the day so far is 723,908 share, 0.8 times its current three-month average. 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 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. GOL has a gross profit margin of 25%. Operating profit gives investors an opportunity to do profit-margin comparisons between companies that do not issue a separate disclosure of their cost of goods sold figures (which are needed to do gross margin analysis). GOL has an operating profit margin of 0%, which is low relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. The company has a net profit margin of -16.7%. This shows that the company reported a net loss in the most recent quarter.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. GOL has a D/E ratio of 219%, which is relatively high. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
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.
The Transportation sector (IYT) is down 1.6%, underperforming the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| J.B. Hunt Transport Services, Inc. (Nasdaq:JBHT) | $6.83 billion | -8.3% |
| Hub Group Inc (Nasdaq:HUBG) | $1.3 billion | -7.9% |
| American Railcar Industries, Inc. (Nasdaq:ARII) | $574.4 million | -4.2% |
| Landstar System, Inc. (Nasdaq:LSTR) | $2.34 billion | -4.1% |
| CH Robinson Worldwide (Nasdaq:CHRW) | $9.58 billion | -2.9% |
| Kansas City Southern (NYSE:KSU) | $7.57 billion | -2.7% |
| Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) | $1.11 billion | +2.4% |
J.B. Hunt Transport Services (Nasdaq:JBHT) has fallen 8.3% and is currently trading at $53.50 per share. At three million shares, the company's volume so far today is 3.8 times its 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. JBHT has a gross profit margin of 39%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. JBHT has an operating profit margin of 10%. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company has a net profit margin of 5.9%.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. JBHT's P/E ratio of 25.9 falls below the industry average of 28.51. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Falling 7.9%, Hub Group (Nasdaq:HUBG) is currently at a share price of $31.70. So far today, 431,367 shares of the company's stock have changed hands. Yesterday's volume was only 170,370 shares. The trading volume for a stock indicates the level of investor interest. 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. HUBG has a low gross profit margin of 11.7%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, HUBG's operating profit margin of 3% and net profit margin of 2% are low.
In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. HUBG has a low capitalization ratio of 4.8%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
At $25.77, American Railcar Industries (Nasdaq:ARII) has slipped 4.2%. With 13,183 shares changing hands so far today, the company's volume is 0.2 times the current three-month average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Margin analysis is a great way to understand the profitability of companies. ARII has a low gross profit margin of 17.2%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin for ARII is 13.1% and net margin is 3.5%, both low relative to its gross margin.
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. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ARII's stock is trading for more than its book value with a P/B ratio of 1.71. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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 dividend yield is calculated by dividing a company's dividends per share by its stock price. LSTR's dividend yield of 0.4% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn
CH Robinson (Nasdaq:CHRW) is down 2.9% to reach $57.20 per share. The company's volume is currently 788,002 shares for the day, 0.6 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. CHRW has a low gross profit margin of 16.1%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, CHRW's operating profit margin of 6.6% and net profit margin of 4.2% are low.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. CHRW's P/S ratio of 1.02 is on the high side. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Kansas City (NYSE:KSU) is trading at $67.02 per share, down 2.7%. So far today, the company's volume is one million shares. This is more trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. 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. KSU's gross profit margin is 59.7%. A company's operating margin is calculated by dividing operating income by revenues. Operating profit margin for KSU is 28.8%. 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. Net margin is 15.8%.
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 measures the leverage of a company, and a company's leverage is a good way to assess risk. KSU has a debt ratio of 54.7%. 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.
Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is up 2.4% to reach a current price of $4.22 per share. The company's volume for the day so far is 723,908 share, 0.8 times its current three-month average. 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 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. GOL has a gross profit margin of 25%. Operating profit gives investors an opportunity to do profit-margin comparisons between companies that do not issue a separate disclosure of their cost of goods sold figures (which are needed to do gross margin analysis). GOL has an operating profit margin of 0%, which is low relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. The company has a net profit margin of -16.7%. This shows that the company reported a net loss in the most recent quarter.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. GOL has a D/E ratio of 219%, which is relatively high. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
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.
by
Investopedia Staff
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