After this morning's trading, the market is looking good. The Nasdaq has risen 0.6%; the S&P 500 has increased 0.3%; and the Dow has moved up 0.3%. The NYSE is a stock exchange based in New York City, considered the largest equities-based exchange in the world based on total market capitalization of its listed securities.
The biggest movers traded on the NYSE so far are:
|Company||Market Cap||Percentage Change|
|Michael Kors Holdings Ltd (NYSE:KORS)||$8.16 billion||+13.2%|
|NCR Corporation (NYSE:NCR)||$4 billion||-11.2%|
|Towers Watson & Co (NYSE:TW)||$4.2 billion||-10.8%|
|Cobalt International Energy, Inc. (NYSE:CIE)||$8.53 billion||+10.4%|
|Estee Lauder Cos (NYSE:EL)||$21.38 billion||+9.1%|
|Imperva Inc (NYSE:IMPV)||$732.4 million||-7.1%|
|Nationstar Mortgage Holdings Inc (NYSE:NSM)||$2.26 billion||+6.7%|
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Michael Kors (NYSE:KORS) is trading at $47.95 per share, a significant rise of 13.2%. The company's volume is currently 11.3 million shares. This is greater than yesterday's volume of 5.7 million shares. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. KORS' PEG ratio of 2.0 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.
Shares of NCR (NYSE:NCR) are currently trading at $22.31, a steep decline of 11.2%. With 4.9 million shares changing hands so far today, the company's volume is 2.1 times its average over the past three months. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The P/B ratio for NCR is 3.75, indicating that the stock is trading for more 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: How Buybacks Warps The Price-To-Book Ratio
Towers (NYSE:TW) is currently trading at $52.24 per share, after a steep drop of 10.8%. The company is currently trading a volume of 767,418 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). TW has a P/E ratio of 17.5, high compared to the industry average of 15.28. 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. 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?
Cobalt International Energy (NYSE:CIE) has soared 10.4% to reach a current price of $22.95 per share. So far today, the company's volume is 2.8 million shares, 0.9 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. 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. The debt ratio for CIE is a low 12%. A low debt ratio means the company has more available cash flow. 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.
Estee Lauder (NYSE:EL) has moved up 9.1% and is currently trading at $60.01 per share. The company is trading at a volume of 4.3 million shares. This is more trading activity than there was yesterday. 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. 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 debt-equity (D/E) ratio is a leverage ratio. The debt-equity ratio of 42% is relatively low. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. 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.
At $29.51, Imperva (NYSE:IMPV) has slipped 7.1%. At 368,789 shares, the company's volume so far today is 1.2 times its current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. IMPV's P/B ratio of 8.65 shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: Using The Price-To-Book Ratio To Evaluate Companies
Increasing 6.7%, Nationstar Mortgage Holdings (NYSE:NSM) is trading at $27.01 per share. This morning, the company is trading a volume of 1.5 million shares. 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 ratio shows the proportion of assets that a company is financing through debt. NSM's debt ratio of 72.8% is fairly high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.