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Tickers in this Article: NSC, CSX, CNI, GWR, UNP, CP, KSU
On a bad day for the market, the Nasdaq has slipped 0.3%, the S&P 500 is trading down 0.3% and the Dow is trading down 0.1%. 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 2.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Norfolk Southern (NYSE:NSC)$23.62 billion-9.1%
CSX (NYSE:CSX)$23.93 billion-5.1%
Canadian National Railway (NYSE:CNI)$40.95 billion-4.4%
Genesee & Wyoming (NYSE:GWR)$2.73 billion-3.6%
Union Pacific (NYSE:UNP)$59.97 billion-3.5%
Canadian Pacific Railway Limited (NYSE:CP)$14.34 billion-2.9%
Kansas City (NYSE:KSU)$8.77 billion-2.9%
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Norfolk Southern (NYSE:NSC) has decreased to $66.07 per share, a 9.1% fall. With 5.8 million shares changing hands so far today, the company's volume is 3.8 times the current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. NSC's PEG ratio of 1.01 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.

Currently trading at $21.62 per share, CSX (NYSE:CSX) has fallen 5.1%. So far today, 10.1 million shares of the company's stock have changed hands. Yesterday, volume was only 6.8 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. CSX's P/B ratio of 2.53 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Falling 4.4%, Canadian National Railway (NYSE:CNI) is currently at a share price of $89.81. The company's volume is currently 587,441 shares for the day, one times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock is. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. CNI's dividend yield of 1.6% is fairly low. If you are an income investor, this stock may not be attractive to you. 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: Guide To Stock-Picking Strategies: Income Investing

Genesee & Wyoming (NYSE:GWR) is down 3.6% to reach $64.72 per share. So far today, the company's volume is 281,201 shares. If a stock price moves on high volume, this means that the change is a significant one. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). The P/E ratio for GWR is 23.2, above the industry average of 18.12. This could mean that the market is expecting big things over the next few months or years. 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

Union Pacific (NYSE:UNP) has fallen 3.5% and is currently trading at $120.68 per share. At 2.2 million shares, the company's volume so far today is 1.2 times the average volume over the last three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. UNP has a debt ratio of 58.8%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Canadian Pacific Railway Limited (NYSE:CP) is currently trading at a share price of $82.61, a 2.9% decline. The company's volume is currently 783,943 shares. This is greater than yesterday's volume of 461,920 shares. Volume indicates the level of interest that investors have in a company at its current price. 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for CP is a high 2.29. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

After a decline of 2.9%, Kansas City (NYSE:KSU) has hit a share price of $76.85. The company's volume is currently 656,500 shares for the day, 0.8 times its current daily average. 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. KSU has a capitalization ratio of 34.8%. 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 No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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