After a bad morning, the Nasdaq has slipped 0.1%, the S&P 500 has fallen 0.1% and the Dow is trading down 0.1%. The Nasdaq Composite Index is a capitalization-weighted index, with each company weighted in proportion to its market value.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|Sanderson Farms (Nasdaq:SAFM)||$932.3 million||+8.9%|
|Mattress (Nasdaq:MFRM)||$944.5 million||+8.3%|
|EZchip (Nasdaq:EZCH)||$933.2 million||+7.5%|
|Liquidity Services (Nasdaq:LQDT)||$1.49 billion||+6%|
|Cyberonics (Nasdaq:CYBX)||$1.25 billion||+4%|
|KLA-Tencor (Nasdaq:KLAC)||$8.82 billion||-3.5%|
|ASML Holding N.V (Nasdaq:ASML)||$23.68 billion||-3.5%|
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Sanderson Farms (Nasdaq:SAFM) is up 8.9% to reach a current price of $44.20 per share. The company is currently trading a volume of 966,703 shares. This is 3.2 times the average volume over the last three months. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. 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. SAFM has a fairly low capitalization ratio of 26.1%. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
Mattress (Nasdaq:MFRM) has risen 8.3% to hit a current price of $30.28 per share. The company's volume is currently 108,620 shares for the day, one times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. MFRM has a D/E ratio of 97%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After an increase of 7.5%, EZchip (Nasdaq:EZCH) has reached a current price of $35.81. The company's volume for the day so far is 325,256 shares. Volume is an important indicator because it indicates how significant a price shift 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 47.39, EZCH's P/E ratio of 80.1 is quite high. This could mean that the market is expecting big things over the next few months or years. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Liquidity Services (Nasdaq:LQDT) has moved up 6% and is currently trading at $50.92 per share. So far today, 252,179 shares have changed hands, consistent with the volume from yesterday. 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. LQDT has a P/B ratio of 6.67 which 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: How Buybacks Warps The Price-To-Book Ratio
Rising 4%, Cyberonics (Nasdaq:CYBX) is currently trading at $47.13 per share. So far today, 755,513 shares have changed hands. This is 4.7 times its average volume over the past three months. The trading volume for a stock indicates the level of investor interest. 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. CYBX has a PEG ratio of 1.74. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Currently trading at $51.13 per share, KLA-Tencor (Nasdaq:KLAC) has fallen 3.5%. So far today, the company's volume is 1.7 million shares, 1.1 times its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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 KLAC is 2.6, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
ASML Holding N.V (Nasdaq:ASML) is trading at $56.01 per share, down 3.5%. So far today, two million shares have 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. ASML has a debt ratio of 48%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.