The market has been doing well after the morning's trading. The Nasdaq has risen 0.8%; the S&P 500 has increased 0.3%; and the Dow has moved up 0.3%.
Despite a good day for the overall market so far, the Real Estate Operations sector (IYR) is down 0.1% and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|The St. Joe Company (NYSE:JOE)||$1.71 billion||+3%|
|American Capital Agency Corp. (Nasdaq:AGNC)||$11.63 billion||-2.3%|
|Realty Income Corp (NYSE:O)||$5.42 billion||+2.2%|
|Saul Centers Inc (NYSE:BFS)||$839.9 million||-1.5%|
|Highwoods Properties Inc (NYSE:HIW)||$2.53 billion||-1.5%|
|CBRE Group Inc (NYSE:CBG)||$5.76 billion||+1.4%|
|CBL & Associates Properties, Inc. (NYSE:CBL)||$3.28 billion||+1.3%|
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St. Joe (NYSE:JOE) has increased to a share price of $19.09, a 3% rise. The company's volume is currently 155,813 shares for the day, consistent with its average over the last three months. In technical analysis, trading volume is used to determine the strength of a market indicator. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. A price/sales ratio is derived by dividing stock market price by company sales. JOE has a high P/S ratio of 13.63. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
American Capital (Nasdaq:AGNC) is currently trading at a share price of $33.27, a 2.3% decline. So far today, the company's volume is 4.8 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. AGNC's P/E ratio of 8.4 is consistent with the industry average. 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?
Realty (NYSE:O) is at $41.50 per share after an increase of 2.2%. The company's volume is currently 517,472 shares for the day, 0.9 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. O has a high D/E ratio of 107%. This shows that the company's assets are financed primarily through debt. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
At $41.77, Saul Centers (NYSE:BFS) has slipped 1.5%. This morning, the company is trading a volume of 11,820 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. BFS has a capitalization ratio of 76.5%, which is on the high end. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
Currently trading at $32.71 per share, Highwoods Properties (NYSE:HIW) has fallen 1.5%. So far today, the company's volume is 67,100 shares, 0.1 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock 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 debt ratio is calculated by dividing total liabilities by total assets. HIW's debt ratio of 67.4% is fairly high. 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.
CBRE Group (NYSE:CBG) is up 1.4% to reach a current price of $17.80 per share. The company's volume is currently 587,938 shares. This is on pace to reach yesterday's trading volume of 1.3 million shares. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PEG ratio for CBG is 1.55. 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.
Increasing 1.3%, CBL & Associates Properties (NYSE:CBL) is trading at $20.94 per share. At 199,602 shares, the company's volume so far today is 0.1 times the current daily 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. 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 is calculated by dividing the current stock price by the company's book value per share. CBL's P/B ratio of 2.61 shows that its share price is higher than its book value. 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. 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.