The market is on the rise this morning, with the Nasdaq increasing 1.4%, the S&P 500 moving up 1.1% and the Dow rising 0.8%. The Nasdaq Composite Index represents all the stocks that trade on the Nasdaq stock market.
The biggest movers traded on the NASDAQ so far are:
|Company||Market Cap||Percentage Change|
|Expedia (Nasdaq:EXPE)||$5.81 billion||+25.1%|
|QLogic Corporation (Nasdaq:QLGC)||$1.21 billion||-19.4%|
|Facebook Inc. - Class A (Nasdaq:FB)||$17.07 billion||-14.1%|
|Acme Packet, Inc. (Nasdaq:APKT)||$1.11 billion||-13.2%|
|Coinstar, Inc. (Nasdaq:CSTR)||$1.85 billion||-12.5%|
|Starbucks (Nasdaq:SBUX)||$39.75 billion||-10.7%|
|Coherent, Inc. (Nasdaq:COHR)||$1.06 billion||+10.2%|
Software Summary: Finviz.com Stock Screener
After a big jump of 25.1%, Expedia (Nasdaq:EXPE) is trading at $57.19 per share. The company is trading at a volume of 10.6 million shares. Yesterday's volume was only 6.5 million shares. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. EXPE's stock is trading for more than its book value with a P/B ratio of 3.55. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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: How Buybacks Warps The Price-To-Book Ratio
Shares of QLogic (Nasdaq:QLGC) are currently trading at $10.15, a steep decline of 19.4%. So far today, 4.3 million shares have changed hands. In technical analysis, trading volume is used to determine the strength of a market indicator. A company's investment value can be 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. 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. The P/E ratio for QLGC is 5.7, below the industry average of 23.36. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Facebook Inc. - Class (Nasdaq:FB) is currently trading at $23.07 per share, after a steep drop of 14.1%. The company's volume is currently 58.4 million shares for the day, three times the current three-month average. 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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. FB's PEG ratio of 2.68 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.
Acme Packet (Nasdaq:APKT) is at a share price of $14.05 after a sharp decline of 13.2%. So far this morning, 8.1 million shares have changed hands. This is 2.4 times the 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. 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 APKT is a high 6.17. 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.
After a precipitous drop of 12.5%, Coinstar (Nasdaq:CSTR) is now trading at a share price of $51.79. This morning, 6.5 million shares have been traded, more than yesterday's 3.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CSTR has a high debt ratio of 60.9%. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. 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.
Taking a 10.7% hit, Starbucks (Nasdaq:SBUX) is currently trading at $46.82 per share. The company's volume for the day so far is 15.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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/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. SBUX's P/B ratio of 6.92 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Coherent (Nasdaq:COHR) rose a significant 10.2% to reach $49.41 per share. At 65,385 shares, the company's volume so far today is 0.9 times its current three-month average. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). COHR's P/E ratio of 13.3 is under the industry average of 41.17. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.