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Tickers in this Article: EDU, SFG, UNF, STT, TNH, MOS, VMW
The market is down this morning. The Nasdaq has slipped 0.1%; the S&P 500 has decreased 0.1%; and the Dow is trading down 0.2%. 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:
CompanyMarket CapPercentage Change
New Oriental Education & Tech Grp (ADR) (NYSE:EDU)$3.53 billion-28.4%
StanCorp Financial Group, Inc. (NYSE:SFG)$1.65 billion-11.4%
UniFirst Corp (NYSE:UNF)$1.36 billion-5.7%
State Street (NYSE:STT)$21.57 billion-5.2%
Terra Nitrogen Company, L.P. (NYSE:TNH)$3.98 billion+4.4%
Mosaic (NYSE:MOS)$23.56 billion+4.4%
VMware (NYSE:VMW)$36.06 billion-4.2%
Forex Broker Summary: UFXMarkets

New Oriental Education & Tech Grp (NYSE:EDU) is currently trading at $15.94 per share, after a steep drop of 28.4%. The company's volume for the day so far is 18.7 million shares. The trading volume for a stock indicates the level of investor interest. 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 EDU is 60.5%. The operating margin ratio can also be useful for tracking an individual company's performance across time, where an increasing ratio is good and a declining ratio may provide cause for concern that a company's business model is weakening. With an operating profit margin of 9.5%, EDU has a high one 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. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net margin is 18.3%.

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 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 a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for EDU is consistent with the industry average at 1.01. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

After a precipitous drop of 11.4%, StanCorp Financial Group (NYSE:SFG) is now trading at a share price of $32.85. The company's volume for the day so far is 475,850 share, 3.8 times its average over the past 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 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 the investor to assess the true value of an individual stock. 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. SFG has a P/B ratio of 0.72, which shows that its book value is higher than its share price. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Slipping 5.7%, UniFirst (NYSE:UNF) is currently trading at $64.47 per share. So far today, the company's volume is 48,338 shares. Yesterday, 51,529 shares changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. UNF's gross profit margin is 36.3%. A company's operating margin is calculated by dividing operating income by revenues. With an operating profit margin of 13.3%, UNF has a low one relative to its gross profit margin. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company's net profit margin is 7.3%.

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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. UNF's P/E ratio of 15.1 is under the industry average of 18.35. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Find P/E And PEG Ratios

State Street (NYSE:STT) has decreased to $41.86 per share, a 5.2% fall. So far today, the company's volume is 3.6 million shares, 1.3 times its current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. STT's P/S ratio of 2.15 is on the high side. This could be a good sign if the share price increases. 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.

After an increase of 4.4%, Terra Nitrogen Company (NYSE:TNH) has reached a current price of $224.74. So far today, 48,625 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. The gross profit margin for TNH is 68.5%. Relative to its gross profit margin, TNH's operating profit margin of 63.1% and net profit margin of 63.9% are low.

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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. TNH's debt ratio of 14.8% is on the low side. 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

After rising 4.4%, Mosaic (NYSE:MOS) is currently trading at a share price of $57.78. At five million shares, the company's volume so far today is 1.2 times its current three-month average. A stock's volume conveys how excited investors are about it. 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. MOS has a gross profit margin of 33.5%. Operating margin for MOS is 18.9% and net margin is 18.6%, both low relative to its gross margin.

Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a leverage ratio. MOS has a low debt-equity ratio of 9%. 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.

VMware (NYSE:VMW) is down 4.2% to reach $80.83 per share. The company is trading at a volume of 2.8 million shares. Yesterday, volume was only 1.2 million shares. Volume is an important indicator because it indicates how significant a price shift is. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. VMW's gross profit margin of 91.9% is fairly high. This may indicate that the company is over-pricing its products and/or services. VMW has an operating profit margin of 20.6% and a net profit margin of 19.8%, both high compared to its gross profit margin.

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. 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. VMW's capitalization ratio is 8%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

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.

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