After this morning's trading, the market is looking good. The Nasdaq has risen 0.3%; the S&P 500 has increased 0.6%; and the Dow has risen 0.7%. 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|
|M\x2FA-COM Technology Solutions (Nasdaq:MTSI)||$542.7 million||-11.2%|
|Central Garden (Nasdaq:CENTA)||$624.5 million||-10.7%|
|United Natural Foods (Nasdaq:UNFI)||$2.95 billion||-8.8%|
|Tibco Software (Nasdaq:TIBX)||$5.23 billion||-8.8%|
|Five Below (Nasdaq:FIVE)||$1.88 billion||-8.4%|
|American Railcar Industries (Nasdaq:ARII)||$655.1 million||+6%|
|Casey\'s General Stores (Nasdaq:CASY)||$2.13 billion||+5.7%|
Forex Broker Summary: Forex Capital Markets (FXCM)
M\x2FA-COM Technology Solutions (Nasdaq:MTSI) is currently trading at $10.63 per share, after a steep drop of 11.2%. At 179,474 shares, the company's volume so far today is 2.3 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for MTSI is 52.2%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
After a precipitous drop of 10.7%, Central Garden (Nasdaq:CENTA) is now trading at a share price of $11.52. So far today, the company's volume is 632,843 shares. Yesterday's volume was only 137,676 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for CENTA is 0.31, which is relatively low. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.
United Natural Foods (Nasdaq:UNFI) is currently trading at a share price of $55.12, a 8.8% decline. The company's volume is currently 1.2 million shares for the day, 3.7 times its average over the past three months. 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 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 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. UNFI has a P/B ratio of 2.84 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Tibco Software (Nasdaq:TIBX) is trading at $29.45 per share, down 8.8%. The company is currently trading a volume of 5.5 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. TIBX has a D/E ratio of 71%. 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.
Five Below (Nasdaq:FIVE) is trading at $31.87 per share, down 8.4%. At 1.2 million shares, the company's volume so far today is 4.7 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. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for FIVE is 142.5%, which is fairly high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. 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.
American Railcar Industries (Nasdaq:ARII) has risen 6% to hit a current price of $32.51 per share. The company is trading at a volume of 80,408 shares. This is more trading activity than there was yesterday. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for ARII is 19.1, above the industry average of 9.83. 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: Profit With The Power Of Price-To-Earnings
Casey's General Stores (Nasdaq:CASY) has increased to a share price of $58.83, a 5.7% rise. With 599,730 shares changing hands so far today, the company's volume is 2.5 times its current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. CASY's PEG ratio of 1.46 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.
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.