The market is off to a rough start. After this morning's trading, the Nasdaq is down 0.4%, the S&P 500 has decreased 0.8% and the Dow has declined 0.8%. Most stocks on the Nasdaq Composite Index are technology and Internet-related, but there are financial, consumer, bio-tech and industrial companies as well.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR)||$2.78 billion||+27.7%|
|AVEO Pharmaceuticals, Inc. (Nasdaq:AVEO)||$579.5 million||-26.8%|
|First Solar (Nasdaq:FSLR)||$1.28 billion||+25.6%|
|Incyte Corporation (Nasdaq:INCY)||$3.19 billion||-22.6%|
|Portfolio Recovery Associates, Inc. (Nasdaq:PRAA)||$1.46 billion||+15.6%|
|Synchronoss Technologies, Inc. (Nasdaq:SNCR)||$703.4 million||+15.4%|
|Itron, Inc. (Nasdaq:ITRI)||$1.53 billion||+11.2%|
Forex Broker Summary: UFXMarkets
Green Mountain Coffee Roasters (Nasdaq:GMCR) is currently at $22.88 per share after a dramatic increase of 27.7%. The company's volume is currently 20.3 million shares for the day, 3.3 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. 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 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 capitalizion ratio of 16.7% is on the low end. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
AVEO Pharmaceuticals (Nasdaq:AVEO) is currently trading at $9.73 per share, after a steep drop of 26.8%. So far today, 708,117 shares have changed hands. This is 3.4 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for AVEO is 2.2, indicating that the stock is trading for more 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: How Buybacks Warps The Price-To-Book Ratio
First Solar (Nasdaq:FSLR) rose a significant 25.6% to reach $18.59 per share. The company is currently trading a volume of 15.2 million shares. Volume is an important indicator because it indicates how significant a price shift is. 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 price/sales ratio is derived by dividing stock market price by company sales. FSLR's P/S ratio of 0.81 is fairly low. Low P/S ratios can indicate unrecognized value potential - so long as other criteria like high profit margins, low debt levels and growth prospects are in place. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Taking a 22.6% hit, Incyte (Nasdaq:INCY) is currently trading at $19.28 per share. This morning, 5.2 million shares have been traded, above yesterday's volume of 2.8 million shares. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. INCY has a debt ratio of 184.8%, which is on the high side. 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.
Portfolio Recovery Associates (Nasdaq:PRAA) has soared 15.6% to reach a current price of $98.40 per share. The company's volume for the day so far is 181,352 shares. This is 1.9 times the average daily volume. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. PRAA has a P/E ratio of 14.3, in line with the industry average. 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?
Synchronoss Technologies (Nasdaq:SNCR) is currently at $20.80 per share after a dramatic increase of 15.4%. The company's volume for the day so far is 808,877 shares, 2.2 times the average volume over the last three months. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The debt-equity ratio of 3% is relatively low. This shows that the company's assets are financed primarily through equity. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
Itron (Nasdaq:ITRI) is trading at $42.57 per share, a significant rise of 11.2%. The company's volume for the day so far is 794,520 shares. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. ITRI has a capitalization ratio of 30.7%. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.