NEW YORK (TheStreet) -- The four railroad and package delivery companies profiled today are components of the Dow Jones Transportation Average, which has risen 10% so far this year. Transports were up 15% when the index set an all-time intraday high at 8515.04 on July 23.
Union Pacific (UNP) is the outperformer and is up 19% year to date. The railroad traded to an all-time intraday high at $103.25 on July 23, the day before the company reported better-than-expected quarterly earnings.
In second place is Norfolk Southern (NSC) with a gain of 11% year to date. This railroad set an all-time intraday high at $108.84 on July 23 after reporting better-than-expected earnings before the opening bell that day. It appears that the Norfolk beat helped shares of Union Pacific set their high before the company reported results.
There are modest year-to-date gains for CSX Corp. (CSX) and FedEx (FDX), which are up 3.6% and 3.1%, respectively. CSX set an all-time intraday high at $31.59 on July 22 after beating analysts' earnings-per-share estimates a week earlier. FedEx gapped higher on June 18 after beating estimates by a dime. The stock set its all-time intraday high at $155.31 on July 17.
There are two companies on the scorecard that have year-to-date declines, however. United Parcel Service (UPS) is down 8.6% and gapped below its 200-day simple moving average after the company missed analysts' EPS estimates before the opening bell on July 29. Kansas City Southern (KSU) is down 9.8% year to date on the hangover from a gap below its 200-day SMA on Jan. 24 after the company reported EPS that missed analysts' estimates.
Here are the postearnings profiles for these six companies. Two "Crunching the Numbers" tables follow.
CSX Corp. ($29.80): After setting an all-time high at $31.59 on July 22 the stock broke below its 50-day simple moving average at $30.48 on July 31 and traded as low as $29.07 on Aug. 6.
The weekly chart is negative with its five-week modified moving average at $30.13. Annual value levels are $28.92 and $25.76 with a semiannual pivot at $30.05 and monthly and semiannual risky levels at $30.61 and $32.95, respectively.
FedEx ($148.28) has been trading back and forth around its 50-day SMA at $148.28 since July 29 after fading from its all-time intraday high at $155.31 on July 17.
The weekly chart is neutral with the stock above its five-week MMA at $148.04 with declining 12x3x3 weekly slow stochastics. Quarterly and monthly value levels are $142.30 and $141.71, respectively, with a semiannual pivot at $148.81 and weekly risky level at $156.20.
Kansas City Southern ($111.67): After gapping below its 200-day SMA at $113.35 on Jan. 24, the stock traded as low as $88.56 on Feb. 18 before beginning a trek up to fill that price gap, which is the Jan. 23 low at $116.50. KC Southern moved back above its 200-day SMA at $108.75 on July 8 and traded as high as $117.25 on July 23, filling that gap to the Jan. 23 low. Many technicians say that price gaps are almost always filled. The 200-day SMA has been a magnet since July 31.
The weekly chart is neutral with the stock above its five-week MMA at $110.02 with declining 12x3x3 weekly slow stochastics. An annual value level at $99.40 gave investors the opportunity to buy this stock on the January and February decline. Weekly and semiannual risky levels are $114.58 and $121.15, respectively.
Norfolk Southern ($102.84): After setting an all-time intraday high at $108.84 on July 23 the stock moved below its 50-day SMA at $102.88 on July 31 and traded as low as $99.63 on Aug. 6.
The weekly chart is neutral with the stock above its five-week MMA at $102.69 with declining 12x3x3 weekly slow stochastics. Quarterly and semiannual value levels are $95.06 and $94.37, respectively, with semiannual and monthly risky levels at $105.19 and $107.06, respectively.
Union Pacific ($99.57): After setting an all-time intraday high at $103.25 on July 23 the stock moved below its 50-day SMA at $100.24 on July 29, trading as low as $96.76 on Aug. 6.
The weekly chart is neutral with the stock above its five-week MMA at $99.48 with declining 12x3x3 weekly slow stochastics. Semiannual and annual value levels are $93.61 and $75.90, respectively, with a weekly pivot at $99.14 and quarterly and monthly risky levels at $102.34 and $107.35, respectively.
United Parcel Service ($96.07): Broke below its 200-day SMA at $99.80 on July 29 following the premarket earnings miss, trading as low as $94.87 on Aug. 8.
The weekly chart is negative with its five-week MMA at $99.57. Annual value levels are $80.14 and $63.31 with a monthly pivot at $96.41 and weekly and semiannual risky levels at $98.85 and $102.34, respectively.
Crunching the Numbers With Richard Suttmeier: Moving Averages & Stochastics
This table provides the technical status for the stocks profiled in today's report.
There are five columns with moving average titles: Five-Week Modified Moving Average; 21-Day Simple Moving Average; 50-Day Simple Moving Average; 200-Day Simple Moving Average; and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with a reading of oversold, rising, overbought, declining or flat.
Interpretations: Stocks below a moving average are listed in red.
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance level and as a "reversion to the mean" over a rolling three- to five-year horizon.
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three- to five-day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance level, and I consider this level as a shorter-term "reversion to the mean" over a rolling six- to 12-month horizon.
Crunching the Numbers With Richard Suttmeier: Earnings & Where to Buy & Where to Sell
This table shows the date the company reported quarterly results, the earnings per share and the beat or miss.
Then it shows where to buy on weakness and where to sell on strength.
"EPS Date" is the day the company reports its quarterly results.
"EPS Estimate" is the EPS estimate from Wall Street analysts.
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
Investors who wish to buy a stock should use a good-'til-canceled limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff
Now let's look at TheStreet Ratings' take on some of these stocks.
TheStreet Ratings team rates UNITED PARCEL SERVICE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED PARCEL SERVICE INC (UPS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UPS's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 5.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- UNITED PARCEL SERVICE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC increased its bottom line by earning $4.62 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($4.95 versus $4.62).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Air Freight & Logistics industry. The net income has significantly decreased by 57.6% when compared to the same quarter one year ago, falling from $1,071.00 million to $454.00 million.
- The gross profit margin for UNITED PARCEL SERVICE INC is currently extremely low, coming in at 12.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.18% trails that of the industry average.
- You can view the full analysis from the report here: UPS Ratings Report
TheStreet Ratings team rates UNION PACIFIC CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNION PACIFIC CORP (UNP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UNP's revenue growth has slightly outpaced the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 10.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- UNION PACIFIC CORP has improved earnings per share by 20.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNION PACIFIC CORP increased its bottom line by earning $4.72 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($5.55 versus $4.72).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Road & Rail industry and the overall market, UNION PACIFIC CORP's return on equity exceeds that of both the industry average and the S&P 500.
- 44.32% is the gross profit margin for UNION PACIFIC CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.46% is above that of the industry average.
- You can view the full analysis from the report here: UNP Ratings Report