This morning has been rocky for the market. The Nasdaq has decreased 0.7%; the S&P 500 is down 0.2%; and the Dow has fallen 0.2%. Also known as the "Big Board", the NYSE relied for many years on floor trading only, using the open outcry system.
The biggest movers traded on the NYSE so far are:
|Company||Market Cap||Percentage Change|
|NACCO Industries (NYSE:NC)||$943.7 million||+4.5%|
|Franco Nev Corp Common (NYSE:FNV)||$8.85 billion||-4.3%|
|Texas Industries (NYSE:TXI)||$1.19 billion||+3.7%|
|PVH (NYSE:PVH)||$6.53 billion||+2.7%|
|VMware (NYSE:VMW)||$42.94 billion||-2.6%|
|FactSet Research Systems (NYSE:FDS)||$4.47 billion||+2.3%|
Broker Summary: Fidelity Online Brokerage
The company's volume is currently 1.5 million shares for the day, one times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for RKT is 18.2, above the industry average of 13.16. 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: Understanding The P/E Ratio
NACCO Industries (NYSE:NC) is up 4.5% to reach a current price of $117.53 per share. The company's volume for the day so far is 48,516 shares. This is about the same trading activity as there was yesterday. 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. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for NC is 1.6, 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
At $58.17, Franco Nev Corp Common (NYSE:FNV) has slipped 4.3%. So far today, the company's volume is 183,669 shares, in keeping with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. A price/sales ratio is derived by dividing stock market price by company sales. FNV's P/S ratio of 14.82 is on the high side. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
After an increase of 3.7%, Texas Industries (NYSE:TXI) has reached a current price of $43.88. So far today, the company's volume is 187,437 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. TXI has a debt ratio of 55.8%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
PVH (NYSE:PVH) has risen 2.7% and is currently trading at $95.16 per share. At 580,292 shares, the company's volume so far today is 0.8 times its current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. PVH has a low dividend yield of 0.2%. A company with a low dividend yield may be a safer investment in the long run. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Investment Valuation Ratios: Dividend Yield
VMware (NYSE:VMW) is trading at $98.03 per share, down 2.6%. The company is trading at a volume of 447,235 shares. This is a sign that there will be less 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. 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 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. VMW has a fairly low capitalization ratio of 7.8%. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
FactSet Research Systems (NYSE:FDS) is at $102.85 per share after an increase of 2.3%. At 355,114 shares, the company's volume so far today is 0.8 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 13.92, FDS' P/E ratio of 25.7 is quite high. This could mean that the market is expecting big things over the next few months or years. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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.