The market is down this morning. The Nasdaq has slipped 0.3%; the S&P 500 has fallen 0.2%; and the Dow has declined 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:
|Company||Market Cap||Percentage Change|
|Bottomline Technologies (Nasdaq:EPAY)||$733.1 million||+21.4%|
|51job, Inc. (ADR) (Nasdaq:JOBS)||$1.05 billion||+14.6%|
|Spreadtrum Communications, Inc (ADR) (Nasdaq:SPRD)||$909.8 million||-11.9%|
|Cornerstone OnDemand, Inc. (Nasdaq:CSOD)||$1.26 billion||+10.2%|
|Open Text Corporation (USA) (Nasdaq:OTEX)||$2.88 billion||+9.9%|
|SS and C Technologies Holdings Inc (Nasdaq:SSNC)||$1.98 billion||-9%|
|Monster Beverage Corp (Nasdaq:MNST)||$10.78 billion||-8.8%|
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Bottomline (Nasdaq:EPAY) is trading at $24.21 per share, a significant rise of 21.4%. The company's volume for the morning is 404,107 shares. This is 2.8 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. EPAY's P/E ratio of 20.8 falls below the industry average of 68.92. A low P/E ratio may indicate that the market expects relatively slower earnings growth. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Find P/E And PEG Ratios
51job, Inc (Nasdaq:JOBS) is currently at $41.77 per share after a dramatic increase of 14.6%. At 195,294 shares, the company's volume so far today is 2.4 times the current three-month average. 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. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). JOBS' PEG ratio of 0.8 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Taking a 11.9% hit, Spreadtrum Communications, Inc (Nasdaq:SPRD) is currently trading at $17.05 per share. So far today, 2.4 million shares have changed hands. 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. 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, 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. SPRD's P/B ratio of 2.63 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
After a big jump of 10.2%, Cornerstone OnDemand (Nasdaq:CSOD) is trading at $27.87 per share. So far today, 683,196 shares have changed hands, whereas yesterday, volume was only 191,597 shares. Volume indicates the level of interest that investors have in a company at its current price. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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 CSOD is a high 13.32. This could be a good sign if the share price increases. 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.
Open Text Corporation (Nasdaq:OTEX) has risen 9.9% to hit a current price of $54.31 per share. So far today, the company's volume is one million shares. This is 2.4 times the current daily average. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. OTEX has a debt ratio of 52.4%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
SS and C Technologies Holdings (Nasdaq:SSNC) is down 9% to reach $23.01 per share. The company's volume for the day so far is 629,499 shares, 2.4 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. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. SSNC has a low capitalization ratio of 7.8%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. 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.
Monster (Nasdaq:MNST) is currently trading at a share price of $55.79, a 8.8% decline. The company is currently trading a volume of 5.5 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. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. MNST's P/E ratio of 41.2 is above the industry average of 22.47. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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: Profit With The Power Of Price-To-Earnings
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.