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Tickers in this Article: MLNX, SCSS, EBAY, POOL, PEET, PCYC, FOSL
This morning has been good for the market, with the Nasdaq increasing 1.1%, the S&P 500 climbing 0.3% and the Dow up 0.3%. 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:
CompanyMarket CapPercentage Change
Mellanox Technologies, Ltd. (Nasdaq:MLNX)$2.64 billion+41.5%
Select Comfort Corp. (Nasdaq:SCSS)$1.23 billion+25.8%
Ebay (Nasdaq:EBAY)$52.24 billion+8.4%
Pool Corporation (Nasdaq:POOL)$1.92 billion-7.4%
Peet\'s Coffee & Tea, Inc. (Nasdaq:PEET)$723.2 million+6%
Pharmacyclics, Inc. (Nasdaq:PCYC)$3.63 billion-5.9%
Fossil, Inc. (Nasdaq:FOSL)$4.22 billion+4.5%
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Mellanox (Nasdaq:MLNX) is trading at $93.92 per share, a significant rise of 41.5%. So far today, the company's volume is 3.7 million shares, 3.6 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. MLNX's gross profit margin is 72.6%. MLNX's operating margin of 14.9% and net margin of 8.2% are high relative to its gross margin.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. MLNX has a P/E ratio of 103.7, high compared to the industry average of 5.59. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios

After a big jump of 25.8%, Select (Nasdaq:SCSS) is trading at $27.39 per share. So far today, the company's volume is 3.5 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. Margin analysis is a great way to understand the profitability of companies. SCSS has a gross profit margin of 64.8%. Operating margin for SCSS is 13.1% and net margin is 8.2%, both high relative to its gross margin.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. PEG ratio for SCSS is consistent with the industry average at 0.91. 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.

Ebay (Nasdaq:EBAY) has risen 8.4% to hit a current price of $43.86 per share. At 20.2 million shares, the company's volume so far today is 1.9 times the average volume over the last three months. 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. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. EBAY's gross profit margin of 75.9% is fairly high. 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. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. EBAY has an operating profit margin of 19.9%, high relative to its gross profit margin. High operating profits can mean the company has effective control of costs, or that sales are increasing faster than operating costs. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net profit margin for the company is 26.8%.

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. 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. EBAY has a P/B ratio of 3.03 which 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. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Pool (Nasdaq:POOL) has decreased to $37.51 per share, a 7.4% fall. The company's volume for the day so far is 922,860 shares. This is greater than yesterday's volume of 352,718 shares. A stock's volume conveys how excited investors are about it. Margin ratios highlight companies that are worth further examination. The gross profit margin for POOL is 30.2%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. POOL has an operating profit margin of 1.7%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 4.1%.

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. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. POOL's dividend yield of 1.6% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Dividend Yield For The Downturn

Peet's Coffee & Tea (Nasdaq:PEET) is at $57.88 per share after an increase of 6%. At 187,652 shares, the company's volume so far today is 1.3 times its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. PEET has a low gross profit margin of 19.1%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Relative to its gross profit margin, PEET's operating profit margin of 5.6% and net profit margin of 4.1% are low.

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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. PEET's P/S ratio of 2.57 is on the high side. 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.

Falling 5.9%, Pharmacyclics (Nasdaq:PCYC) is currently at a share price of $49.42. The company's volume for the day so far is 1.3 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. PCYC has an operating profit margin of -932.1%. In other words, the company reported a net operating loss in the most recent quarter.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio is calculated by dividing total liabilities by total assets. PCYC's debt ratio of 38.1% is on the low side. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.

Fossil (Nasdaq:FOSL) has moved up 4.5% and is currently trading at $71.18 per share. The company's volume for the day so far is 550,469 share, 0.4 times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for FOSL is 58.1%. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. Operating profit margin for FOSL is 14.1%. 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 has a net profit margin of 11.3%.

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 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. FOSL has a low capitalization ratio of 0.7%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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.

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