The morning has been bad for the market. The Nasdaq is trading down 0.2%; the S&P 500 has fallen 0.2%; and the Dow has slipped 0.2%.
The Consumer/Non-Cyclical sector (XLP) is currently ahead of the overall market, down only 0.2%, and its biggest movers are currently:
|Company||Market Cap||Percentage Change|
|Monster Beverage Corp (Nasdaq:MNST)||$10.78 billion||-8.4%|
|Elizabeth Arden, Inc. (Nasdaq:RDEN)||$1.29 billion||+3.4%|
|Coca-Cola HBC S.A. (ADR) (NYSE:CCH)||$6.35 billion||+2.5%|
|Herbalife Ltd. (NYSE:HLF)||$5.81 billion||-2.2%|
|Archer Daniels (NYSE:ADM)||$17.44 billion||-2.1%|
|Post Holdings Inc (NYSE:POST)||$1.09 billion||-2.1%|
|Annies Inc (NYSE:BNNY)||$730 million||-1.9%|
Broker Summary: Fidelity Online Brokerage
Monster (Nasdaq:MNST) has fallen 8.4% and is currently trading at $56.06 per share. So far today, the company's volume is 4.9 million shares, 1.8 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 debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for MNST is a low 27.4%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.
Elizabeth Arden (Nasdaq:RDEN) has moved up 3.4% and is currently trading at $45.50 per share. The company's volume for the day so far is 245,775 shares. This is one times its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. RDEN's PEG ratio of 1.98 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.
Increasing 2.5%, Coca-Cola HBC S.A (NYSE:CCH) is trading at $17.68 per share. This morning, 18,520 shares have been traded, which is more trading activity than 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. Understanding investment valuation ratios allows an investor to assess the true 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. CCH has a P/B ratio of 1.67 which 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 value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
After a decline of 2.2%, Herbalife (NYSE:HLF) has hit a share price of $50.40. The company is currently trading a volume of 814,938 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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. HLF's dividend yield is 2.3%. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Dividend Yield For The Downturn
ADM (NYSE:ADM) is trading at $25.91 per share, down 2.1%. With 1.9 million shares changing hands so far today, the company's volume is 0.3 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 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. The P/S ratio for ADM is 0.22, which is relatively low. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. 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.
At $31.10, Post Holdings (NYSE:POST) has slipped 2.1%. This morning, the company's volume is 67,971 shares. This is 0.3 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. Compared to the industry average of 32.38, POST's P/E ratio of 47.1 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Annies (NYSE:BNNY) is currently trading at a share price of $41.99, a 1.9% decline. So far today, 19,697 shares have changed hands, while it was 193,917 shares yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. BNNY has a low debt ratio of 8.6%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.