The market is currently up, with the Nasdaq increasing 0.1%, the S&P 500 climbing 0.2% and the Dow up 0.3%. 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 up 0.5%, outperforming the market overall. The biggest movers in the sector so far are:
|Company||Market Cap||Percentage Change|
|Swift Transportation (NYSE:SWFT)||$1.08 billion||+8.6%|
|United Continental Holdings (NYSE:UAL)||$6.4 billion||+6.5%|
|Spirit Airlines (Nasdaq:SAVE)||$1.17 billion||+5%|
|Copa Holdings (NYSE:CPA)||$3.68 billion||+2.8%|
|Allegiant Travel (Nasdaq:ALGT)||$1.21 billion||+2.5%|
|American Railcar Industries (Nasdaq:ARII)||$674.1 million||+2.4%|
|Grupo Aeroportuario del Pacifico (NYSE:PAC)||$2.24 billion||+2.2%|
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Swift Transportation (NYSE:SWFT) is up 8.6% to reach a current price of $8.43 per share. So far today, the company's volume is 2.6 million shares, 1.5 times its current daily average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The P/E ratio for SWFT is 10.1, below the industry average of 21.09. 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: Can Investors Trust the P/E Ratio?
United Continental Holdings (NYSE:UAL) is at $20.53 per share after an increase of 6.5%. The company's volume is currently 2.3 million shares. This is about the same trading activity as there was yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. 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 debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for UAL is 761%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Spirit Airlines (Nasdaq:SAVE) has increased to a share price of $16.91, a 5% rise. The company's volume is currently 401,921 shares for the day, 0.4 times the current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. The P/B ratio for SAVE is 2.33, indicating that the stock is trading for more 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. 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
Copa Holdings (NYSE:CPA) has risen 2.8% and is currently trading at $85.47 per share. This morning, the company is trading a volume of 94,237 shares. 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. 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. Dividend yield measures the income that a stock will generate for an investor. CPA has a dividend yield of 2.5%. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Investment Valuation Ratios: Dividend Yield
Allegiant Travel (Nasdaq:ALGT) has moved up 2.5% and is currently trading at $64.71 per share. So far today, the company's volume is 36,643 shares, 0.2 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for ALGT is a high 1.56. This could be a good sign if the share price increases. 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.
After rising 2.4%, American Railcar Industries (Nasdaq:ARII) is currently trading at a share price of $32.32. The company is trading at a volume of 27,504 shares. At this rate, trading activity will likely be down from yesterday when 138,895 shares changed hands. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ARII has a debt ratio of 56.1%. 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.
Grupo Aeroportuario del Pacifico (NYSE:PAC) is currently trading at $40.91 per share, a 2.2% increase. The company's volume for the day so far is 19,848 shares, 0.3 times the average volume over the last three months. Volume indicates the level of interest that investors have in a company at its current price. 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 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. PAC's capitalization ratio is 5.8%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. 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 On any given day, a particular stock may see positive or negative change in its share price. 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.