Transportation Winners and Losers

Includes: BMO, DAL, GML, ULTR
by: Research Recap

Audit Integrity identifies potential losers and winners in a transportation industry suffering the impact of record high oil prices in a new report.

Individual sectors have varying levels of cost absorption and pass through structure, resulting in differing levels of cost offset and impact to profitability, the report says.

Audit Integrity looks at companies through the lens of how they rank in corporate governance, using its Accounting and Governance Risk [AGR] and AGR Equity Factor rankings.

One airline in the bottom-ranked Very Aggressive AGR category is Delta Air Lines (NYSE:DAL).  Its stock is down 73% from a year ago.


Rising oil prices also affect the shipping lines, and have made transportation costs significantly more expensive, especially for products with a high freight cost-to-value ratio.

Among shipping companies, Genco Shipping & Trading (NYSE:GNK) has a low Very Aggressive AGR ranking, while Brazilian shipper Ultrapetrol (Bahamas) Limited (NASDAQ:ULTR) is in the top-ranked Conservative AGR category.

Railroads are also dependent on diesel but are relatively more efficient than trucking companies, so stand to benefit from increasing demand. Burlington Norther Santa Fe (BNI) is in Audit Integrity’s top-ranked category and also benefits from being the second-largest railroad operator in the US with the advantage of a substantial amount of railroad tracks.

The report, available here, details the 11 transportation companies with Audit Integrity’s highest AGR rankings and the 11 with the lowest.