This morning has been good for the market. The Nasdaq is trading up 1.9%; the S&P 500 is up 1.8%; and the Dow has climbed 1.7%. 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|
|Tangoe (Nasdaq:TNGO)||$634.8 million||-21.5%|
|MarketAxess Holdings (Nasdaq:MKTX)||$1.27 billion||-11.2%|
|AeroVironment (Nasdaq:AVAV)||$539.2 million||-10.2%|
|Warner (Nasdaq:WCRX)||$3.55 billion||-9.5%|
|Credit (Nasdaq:CACC)||$2.44 billion||-7.3%|
|Randgold Resources Ltd (Nasdaq:GOLD)||$9.41 billion||+5.7%|
|Strayer Education (Nasdaq:STRA)||$779.4 million||+5.4%|
Broker Summary: Fidelity Online Brokerage
Tangoe (Nasdaq:TNGO) is at a share price of $13.35 after a sharp decline of 21.5%. The company's volume is currently 3.9 million shares for the day, which is more trading activity than there was yesterday. 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 is calculated by dividing the current stock price by the company's book value per share. TNGO has a P/B ratio of 3.49 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
MarketAxess Holdings (Nasdaq:MKTX) is currently trading at $30.19 per share, after a steep drop of 11.2%. So far today, the company's volume is 471,882 shares. This is three times the average volume over the last three months. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. MKTX has a P/E ratio of 25.8, high compared to the industry average of 16.86. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
Shares of AeroVironment (Nasdaq:AVAV) are currently trading at $21.76, a steep decline of 10.2%. This morning, the company is trading a volume of 361,778 shares. 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. 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. 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 AVAV is 1.3. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Falling 9.5%, Warner (Nasdaq:WCRX) is currently at a share price of $12.84. At 10.6 million shares, the company's volume so far today is two times the current daily average. Volume is an important indicator because it indicates how significant a price shift 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 price/sales ratio measures a company's stock market price by its revenues. WCRX has a high P/S ratio of 1.71. 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.
Credit (Nasdaq:CACC) is trading at $92.20 per share, down 7.3%. The company's volume for the day so far is 60,584 shares. Yesterday, volume was only 30,877 shares. Volume indicates the level of interest that investors have in a company at its current price. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CACC has a debt ratio of 73%, which is on the high side. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. 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.
Randgold Resources Ltd (Nasdaq:GOLD) is at $108.26 per share after an increase of 5.7%. The company's volume for the day so far is 656,959 shares, 1.5 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. 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 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. GOLD's capitalization ratio is 0.1%, which is relatively low. 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.
Rising 5.4%, Strayer Education (Nasdaq:STRA) is currently trading at $69.20 per share. So far today, 82,325 shares have changed hands. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for STRA is 11.87, indicating that the stock is trading for more 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
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.