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Gilead and More Big Movers on the Nasdaq on September 17, 2012
The market is down this morning. The Nasdaq is down 0.2%; the S&P 500 is trading down 0.2%; and the Dow has slipped 0.2%. 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:
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Jazz Pharmaceuticals (Nasdaq:JAZZ) is trading at $53.93 per share, a significant rise of 12.1%. The company's volume is currently 2.2 million shares for the day, 2.8 times the average daily volume. 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. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. JAZZ's P/E ratio is 20.0. 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: How To Find P/E And PEG Ratios
Currently trading at $46.59 per share, OpenTable (Nasdaq:OPEN) has fallen 5.3%. So far today, the company's volume is 265,130 shares. This is 0.3 times the current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. OPEN's PEG ratio of 2.31 is in line with the industry average. 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.
Medivation (Nasdaq:MDVN) has increased to a share price of $106.66, a 5.2% rise. This morning, the company is trading a volume of 221,371 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. The P/B ratio for MDVN is 47.19, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
BroadSoft (Nasdaq:BSFT) is currently trading at $42.25 per share, a 4.9% increase. So far today, 368,309 shares have changed hands, consistent with the volume from yesterday on pace to finish the day below yesterday's volume of 794,278 shares. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. BSFT has a D/E ratio of 59%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
After rising 4.9%, Gilead (Nasdaq:GILD) is currently trading at a share price of $65.03. So far this morning, 9.3 million shares have changed hands. This is 1.5 times the current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for GILD is 4.31, which is relatively high. This could be a good sign if the share price increases. 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.
At $57.80, Netflix (Nasdaq:NFLX) has slipped 4.5%. The company's volume for the day so far is 2.4 million shares, in keeping with the average volume over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. 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. The debt ratio for NFLX is 80.2%, which is relatively high. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Deckers (Nasdaq:DECK) is down 3.9% to reach $47.02 per share. So far today, 744,626 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The P/E ratio for DECK is 11.0, below the industry average of 29.82. 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. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
The biggest movers traded on the NASDAQ so far are:
| Company | Market Cap | Percentage Change |
| Jazz Pharmaceuticals (Nasdaq:JAZZ) | $2.77 billion | +12.1% |
| OpenTable (Nasdaq:OPEN) | $1.11 billion | -5.3% |
| Medivation (Nasdaq:MDVN) | $3.74 billion | +5.2% |
| BroadSoft (Nasdaq:BSFT) | $1.11 billion | +4.9% |
| Gilead (Nasdaq:GILD) | $46.92 billion | +4.9% |
| Netflix (Nasdaq:NFLX) | $3.36 billion | -4.5% |
| Deckers (Nasdaq:DECK) | $1.81 billion | -3.9% |
Jazz Pharmaceuticals (Nasdaq:JAZZ) is trading at $53.93 per share, a significant rise of 12.1%. The company's volume is currently 2.2 million shares for the day, 2.8 times the average daily volume. 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. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. JAZZ's P/E ratio is 20.0. 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: How To Find P/E And PEG Ratios
Currently trading at $46.59 per share, OpenTable (Nasdaq:OPEN) has fallen 5.3%. So far today, the company's volume is 265,130 shares. This is 0.3 times the current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. OPEN's PEG ratio of 2.31 is in line with the industry average. 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.
Medivation (Nasdaq:MDVN) has increased to a share price of $106.66, a 5.2% rise. This morning, the company is trading a volume of 221,371 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. The P/B ratio for MDVN is 47.19, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
After rising 4.9%, Gilead (Nasdaq:GILD) is currently trading at a share price of $65.03. So far this morning, 9.3 million shares have changed hands. This is 1.5 times the current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for GILD is 4.31, which is relatively high. This could be a good sign if the share price increases. 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.
At $57.80, Netflix (Nasdaq:NFLX) has slipped 4.5%. The company's volume for the day so far is 2.4 million shares, in keeping with the average volume over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. 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. The debt ratio for NFLX is 80.2%, which is relatively high. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Deckers (Nasdaq:DECK) is down 3.9% to reach $47.02 per share. So far today, 744,626 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The P/E ratio for DECK is 11.0, below the industry average of 29.82. 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. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
by
Investopedia Staff
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