It's been a bad morning for the market, with the Nasdaq down 0.3%, the S&P 500 falling 0.3% and the Dow decreasing 0.4%. The Nasdaq Composite Index represents all the stocks that trade on the Nasdaq stock market.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|Luminex Corporation (Nasdaq:LMNX)||$1.02 billion||-13.8%|
|Questcor Pharmaceuticals, Inc. (Nasdaq:QCOR)||$3.17 billion||+12.9%|
|Allot Communications Ltd. (Nasdaq:ALLT)||$830.1 million||-8.8%|
|Akorn, Inc. (Nasdaq:AKRX)||$1.5 billion||+5.9%|
|CommVault Systems, Inc. (Nasdaq:CVLT)||$2.03 billion||-4.9%|
|Sourcefire, Inc. (Nasdaq:FIRE)||$1.42 billion||-4.2%|
|Facebook Inc. - Class A (Nasdaq:FB)||$20.18 billion||+3.5%|
Software Summary: Finviz.com Stock Screener
Luminex (Nasdaq:LMNX) is at a share price of $21 after a sharp decline of 13.8%. The company is currently trading a volume of 1.4 million shares. This is 5.7 times its current three-month average. 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. Margin ratios highlight companies that are worth further examination. LMNX's gross profit margin of 78.2% is fairly high. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Compared with its gross profit margin, LMNX's operating profit margin of 11.5% and net profit margin of 7.1% are high.
Valuation ratios like 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 are useful in determining how attractive a potential or existing investment is. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. LMNX's stock is trading for more than its book value with a P/B ratio of 3.49. 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. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
Questcor Pharmaceuticals (Nasdaq:QCOR) is trading at $56.71 per share, a significant rise of 12.9%. The company's volume is currently 3.6 million shares for the day, 2.5 times the average daily volume. A stock's volume conveys how excited investors are about it. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. QCOR has a relatively high gross profit margin of 94.9%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. Net margin is 38.6%, which is high relative to its gross profit margin. Companies with high net profit margins have a bigger cushion to protect themselves during the hard times. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. Operating profit margin for QCOR is 59.7%.
Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. QCOR has a high P/S ratio of 8.55. This could be a good sign if the share price increases. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Allot (Nasdaq:ALLT) is currently trading at a share price of $24.47, a 8.8% decline. The company's volume for the day so far is 324,291 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. ALLT has a debt ratio of 17.5%, which is fairly low. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Akorn (Nasdaq:AKRX) has risen 5.9% and is currently trading at $16.67 per share. So far today, 1.1 million shares have changed hands, lighter than yesterday's volume of 1.3 million 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. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. AKRX's gross profit margin is 63.2%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. AKRX's operating profit margin is 30.9%. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. The company's net profit margin is 28%.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. The capitalization ratio for AKRX is 40.8%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Slipping 4.9%, CommVault Systems (Nasdaq:CVLT) is currently trading at $43.23 per share. The company's volume for the day so far is 340,141 shares. This is 0.7 times its average volume over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. CVLT has a gross profit margin of 86.9%, which is on the high end. This may indicate that the company is over-pricing its products and/or services. Operating margin for CVLT is 12.2% and net margin is 7.9%, both high relative to its gross margin.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. Compared to the industry average of 63.99, CVLT's P/E ratio of 66.9 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
Sourcefire (Nasdaq:FIRE) has decreased to $46.19 per share, a 4.2% fall. So far today, the company's volume is 558,873 shares, 0.8 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Margin analysis is a great way to understand the profitability of companies. FIRE's gross profit margin of 79% is on the high side. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. FIRE's operating margin of 0.3% and net margin of 3.2% are high relative to its gross margin.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. FIRE's PEG ratio is 12.47. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Facebook Inc. - Class (Nasdaq:FB) is at $32.84 per share after an increase of 3.5%. The company is currently trading a volume of 8.1 million shares. The trading volume for a stock indicates the level of investor interest. 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. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. FB's P/B ratio of 12.53 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.