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Tickers in this Article: NXPI, MLNX, COHR, ADI, XLNX, VECO, KLAC
The market is having a bad day so far: the Nasdaq has decreased 0.2%; the S&P 500 is down 0.4%; and the Dow has fallen 0.5%.

The Semiconductors sector (XLK) is down 0.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
NXP (Nasdaq:NXPI)$6.03 billion-3.8%
Mellanox (Nasdaq:MLNX)$4.74 billion-2.7%
Coherent (Nasdaq:COHR)$1.16 billion-2.2%
Analog Devices (Nasdaq:ADI)$12.03 billion-2.1%
Xilinx (Nasdaq:XLNX)$8.99 billion-2.1%
Veeco Instruments (Nasdaq:VECO)$1.34 billion-1.9%
KLA-Tencor (Nasdaq:KLAC)$8.92 billion-1.1%
Broker Summary: TD Ameritrade Thinkorswim

Slipping 3.8%, NXP (Nasdaq:NXPI) is currently trading at $23.38 per share. The company's volume is currently 1.4 million shares for the day, 0.8 times the current three-month average. 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. 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. NXPI has a high P/S ratio of 1.42. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

After a decline of 2.7%, Mellanox (Nasdaq:MLNX) has hit a share price of $110.90. So far today, 428,069 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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). MLNX's PEG ratio of 1.73 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Coherent (Nasdaq:COHR) is trading at $47.78 per share, down 2.2%. The company's volume is currently 4,123 shares for the day, 0.1 times its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. COHR has a low debt ratio of 25.5%. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Analog Devices (Nasdaq:ADI) has decreased to $39.49 per share, a 2.1% fall. The company is currently trading a volume of 1.7 million shares. 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. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). Compared to the industry average of 7.36, ADI's P/E ratio of 17.5 is quite high. 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. 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

Currently trading at $33.56 per share, Xilinx (Nasdaq:XLNX) has fallen 2.1%. At 919,938 shares, the company's volume so far today is 0.4 times its current three-month average. A stock's volume conveys how excited investors are about it. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. XLNX's capitalization ratio is 25.2%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Veeco Instruments (Nasdaq:VECO) is down 1.9% to reach $33.55 per share. So far today, the company's volume is 284,511 shares. This is a sign that there will be less trading activity than there was yesterday. 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. 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 calculated by dividing the current stock price by the company's book value per share. The P/B ratio for VECO is 1.65, indicating that the stock is trading for more 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. 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

Slipping 1.1%, KLA-Tencor (Nasdaq:KLAC) is currently trading at $52.99 per share. The company's volume is currently 639,995 shares for the day, consistent with its current daily average. The trading volume for a stock indicates the level of investor interest. 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. 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. KLAC has a dividend yield of 3%. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Guide To Stock-Picking Strategies: Income Investing

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.

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