This morning, the Nasdaq has moved little, the S&P 500 has decreased 0.3% and the Dow has been relatively flat. The recent surge in popularity of technological stocks has launched the Nasdaq Composite Index into the spotlight, making it one of the premier indexes in the world.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|VIVUS (Nasdaq:VVUS)||$2.45 billion||-9.8%|
|Questcor Pharmaceuticals (Nasdaq:QCOR)||$3.01 billion||+7.6%|
|ISIS Pharmaceuticals (Nasdaq:ISIS)||$1.47 billion||-6.4%|
|First Solar (Nasdaq:FSLR)||$2.01 billion||-5.6%|
|Expedia (Nasdaq:EXPE)||$7.44 billion||+5.1%|
|Littelfuse (Nasdaq:LFUS)||$1.2 billion||+4.3%|
|Green Mountain Coffee Roasters (Nasdaq:GMCR)||$4.66 billion||-3.9%|
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Falling 9.8%, VIVUS (Nasdaq:VVUS) is currently at a share price of $21.39. So far today, the company's volume is 6.2 million shares, three times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. VVUS' P/B ratio of 6.99 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. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Questcor Pharmaceuticals (Nasdaq:QCOR) is at $32.64 per share after an increase of 7.6%. This morning, the company is trading a volume of 6.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. QCOR has a P/E ratio of 14.7. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Can Investors Trust the P/E Ratio?
ISIS Pharmaceuticals (Nasdaq:ISIS) is down 6.4% to reach $14.42 per share. So far today, the company's volume is 786,842 shares, 0.7 times its current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ISIS has a high P/S ratio of 9.76. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Slipping 5.6%, First Solar (Nasdaq:FSLR) is currently trading at $21.31 per share. The company's volume is currently 4.3 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. FSLR has a low debt ratio of 38.7%. A low debt ratio means the company has more available cash flow. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
Expedia (Nasdaq:EXPE) has moved up 5.1% and is currently trading at $60 per share. At three million shares, the company's volume so far today is 1.2 times the current daily average. 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. EXPE has a D/E ratio of 56%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Littelfuse (Nasdaq:LFUS) has risen 4.3% to hit a current price of $58.43 per share. So far today, the company's volume is 75,347 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. LFUS has a P/B ratio of 2.33 which shows that its share price is higher than its book value. 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 ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Green Mountain Coffee Roasters (Nasdaq:GMCR) is down 3.9% to reach $26.75 per share. The company's volume for the day so far is 7.9 million shares, 0.9 times the average volume over the last three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios allow the investor to make a quick determination as to a company's investment value. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). GMCR's P/E ratio of 12.8 is under the industry average of 26.73. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Investment Valuation Ratios: Price/Earnings Ratio
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
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