The market has been slipping so far today. The Nasdaq is trading down 0.4%; the S&P 500 has slipped 0.8%; and the Dow has decreased 0.8%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.
The Technology sector (XLK) is currently lagging behind the overall market, down 0.5%, and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|First Solar (Nasdaq:FSLR)||$1.28 billion||+25.6%|
|MedAssets, Inc. (Nasdaq:MDAS)||$749.4 million||+17.7%|
|Synchronoss Technologies, Inc. (Nasdaq:SNCR)||$703.4 million||+15.4%|
|Insight Enterprises, Inc. (Nasdaq:NSIT)||$725.2 million||+12.6%|
|LivePerson, Inc. (Nasdaq:LPSN)||$986.7 million||-11.3%|
|Itron, Inc. (Nasdaq:ITRI)||$1.53 billion||+11.2%|
|ANSYS, Inc. (Nasdaq:ANSS)||$5.58 billion||+9.1%|
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After a big jump of 25.6%, First Solar (Nasdaq:FSLR) is trading at $18.59 per share. So far today, the company's volume is 15.2 million shares. Yesterday's volume was only 9.2 million shares. If a stock price moves on high volume, this means that the change is a significant one. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. FSLR has a fairly low capitalization ratio of 20.1%. Investors generally consider a company with low debt and high equity levels is a good quality investment. 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.
MedAssets (Nasdaq:MDAS) rose a significant 17.7% to reach $15.12 per share. At 1.9 million shares, the company's volume so far today is 6.8 times the current daily average. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. MDAS has a P/B ratio of 2.09 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: How Buybacks Warps The Price-To-Book Ratio
Synchronoss Technologies (Nasdaq:SNCR) is trading at $20.80 per share, a significant rise of 15.4%. So far today, 808,877 shares have changed hands. 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 allow the investor to make a quick determination as to a company's investment value. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for SNCR is 36.0, above the industry average of 22.74. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
Insight Enterprises (Nasdaq:NSIT) is currently at $18.39 per share after a dramatic increase of 12.6%. At 178,314 shares, the company's volume so far today is 1.2 times its current three-month 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. NSIT has a low P/S ratio of 0.18. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.
LivePerson (Nasdaq:LPSN) is currently trading at $15.90 per share, after a steep drop of 11.3%. The company's volume is currently 1.5 million shares. This is more trading activity than there was yesterday. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. LPSN's debt ratio of 17.1% is on the low side. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
Itron (Nasdaq:ITRI) has soared 11.2% to reach a current price of $42.57 per share. So far today, the company's volume is 794,520 shares, 2.1 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for ITRI is 54%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Rising 9.1%, ANSYS (Nasdaq:ANSS) is currently trading at $65.38 per share. The company is currently trading a volume of 764,576 shares. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalizion ratio of 1.4% is on the low end. 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.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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.