The market is currently down, with the Nasdaq falling 1%, the S&P 500 declining 0.5% and the Dow slipping 0.2%. The Nasdaq Composite Index is a capitalization-weighted index, with each company weighted in proportion to its market value.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|Zumiez (Nasdaq:ZUMZ)||$796.1 million||+6.2%|
|InterDigital (Nasdaq:IDCC)||$1.41 billion||+5.2%|
|Stratasys (Nasdaq:SSYS)||$1.21 billion||-4.6%|
|Deckers (Nasdaq:DECK)||$1.3 billion||+3.8%|
|Mellanox (Nasdaq:MLNX)||$4.01 billion||-3.5%|
|Strayer Education (Nasdaq:STRA)||$745.1 million||+2.9%|
|Netflix (Nasdaq:NFLX)||$2.99 billion||+2.5%|
Broker Summary: TD Ameritrade Thinkorswim
Zumiez (Nasdaq:ZUMZ) has moved up 6.2% and is currently trading at $26.96 per share. The company's volume for the day so far is 719,069 shares. A stock's volume conveys how excited investors are about it. 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 is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. ZUMZ has a PEG ratio of 1.09, which is consistent 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.
Rising 5.2%, InterDigital (Nasdaq:IDCC) is currently trading at $34.69 per share. The company's volume is currently 787,049 shares for the day, 1.8 times its average over the past three months. 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 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. IDCC's stock is trading for more than its book value with a P/B ratio of 3.62. 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 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
Stratasys (Nasdaq:SSYS) has fallen 4.6% and is currently trading at $54 per share. The company's volume for the day so far is 311,025 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. 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. SSYS has a high P/S ratio of 5.92. 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 keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Deckers (Nasdaq:DECK) has increased to a share price of $36.32, a 3.8% rise. The company's volume is currently 1.4 million shares for the day, in keeping with its current daily average. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for DECK is a low 29.7%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.
Mellanox (Nasdaq:MLNX) has decreased to $97.29 per share, a 3.5% fall. The company is trading at a volume of 1.1 million shares. Volume indicates the level of interest that investors have in a company at its current price. 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. 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. MLNX's P/E ratio of 83.5 is above the industry average of 14.34. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Strayer Education (Nasdaq:STRA) has risen 2.9% to hit a current price of $64.54 per share. With 23,360 shares changing hands so far today, the company's volume is 0.2 times the average volume over the last three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. STRA's capitalization ratio of 50.3% is relatively high. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. 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.
Netflix (Nasdaq:NFLX) is currently trading at $55.15 per share, a 2.5% increase. The company is currently trading a volume of 2.4 million shares. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. PEG ratio for NFLX is consistent with the industry average at 1.16. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.