* Upward revisions for transports slowing
* Dow Jones Transportation index stumbled in January
* Valuation could attract investors
By Chuck Mikolajczak
NEW YORK, Feb 6 (Reuters) - Transport stocks are showing signs of slowing down after being one of the best performers among equity groups in recent months as the market waits to see if oil prices have reached a bottom.
Since June, global crude benchmarks have had a seven-month slump that slashed prices by nearly 60 percent on a combination of over supplied markets and lackluster demand. The drop made transports more attractive to investors betting input costs would decline and increase their profits.
As a result, the Dow Jones Transportation average rebounded 15 percent as of Feb. 4 from a 5-month low hit in October. The broader S&P 500 rose 9.4 percent in the same time frame.
However, the price-weighted transport index ran into trouble last month, dropping 5.4 percent for the month on the back of an 11 percent plunge in United Parcel Service after the package delivery company forecast quarterly earnings below expectations.
"The easy answer is to look at this and say we got very excited about the benefit to transportation companies in general by the significant pullback in energy prices; now we have to wait and see if this comes to fruition," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "We need to stay at lower energy prices for a while for this to work its way into the balance sheet."
Crude prices have risen nearly 20 percent over the past six sessions, but remain about 50 percent below their peak from the middle of last year due to worries of a global oil glut.
In a recent note to clients, Credit Suisse analyst Lori Calvasina in New York said that while the rate of upward earnings per share revisions in the sector has been stronger than other industry groups, they appear to have peaked and are trending lower.
Calvasina views the rate of revisions as a negative signal for performance, as revision peaks often signal a turn in the market.
However, while the slowing rate of upward revisions maybe viewed as a negative signal, investors may also be enticed by relatively attractive valuations which could keep pushing the sector higher.
According to S&P Dow Jones Indices, the forward price-to-earnings ratio for the Dow Jones Transportation index stood at 14.77 on Feb. 4 and has been falling since the start of the year, when it hit 17.27 on Jan. 2. (Reporting by Chuck Mikolajczak; Editing by Alan Crosby)