The Nasdaq is trading down 0.8%, the S&P 500 has declined 0.6% and the Dow has fallen 0.8% on a bad morning for the market.

The Semiconductors sector (XLK) is down 0.7%, outperforming the market overall. Currently, the biggest movers in the sector are:


CompanyMarket CapPercentage Change
ARM Holdings plc (Nasdaq:ARMH)$12.5 billion-8.5%
Monolithic Power Systems (Nasdaq:MPWR)$760.8 million-7.7%
First Solar (Nasdaq:FSLR)$1.74 billion-5.7%
Skyworks Solutions (Nasdaq:SWKS)$5.81 billion-4.2%
Cavium (Nasdaq:CAVM)$1.61 billion-4%
Multi-Fineline Electronix (Nasdaq:MFLX)$582.1 million-3.6%
Vishay (NYSE:VSH)$1.37 billion+3.3%
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After a decline of 8.5%, ARM Holdings plc (Nasdaq:ARMH) has hit a share price of $24.91. So far today, the company's volume is 5.2 million shares, 4.1 times its 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. The debt ratio for ARMH is a low 15.5%. 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.

Monolithic Power Systems (Nasdaq:MPWR) has decreased to $19.91 per share, a 7.7% fall. So far today, 443,742 shares have changed hands. 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. 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. 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 MPWR is 2.2. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

First Solar (Nasdaq:FSLR) is down 5.7% to reach $18.84 per share. So far today, the company's volume is 7.2 million shares, 0.7 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. FSLR has a low capitalization ratio of 12.3%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. 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.

Skyworks Solutions (Nasdaq:SWKS) is trading at $29.17 per share, down 4.2%. The company's volume for the day so far is 2.8 million shares. This is about the same trading activity as there was yesterday. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for SWKS is 3.09, 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. 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

Cavium (Nasdaq:CAVM) has fallen 4% and is currently trading at $31 per share. At 368,433 shares, the company's volume so far today is in line with the current daily average. If a stock price moves on high volume, this means that the change is a significant one. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/sales ratio measures a company's stock market price by its revenues. CAVM's P/S ratio of 6.0 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Multi-Fineline Electronix (Nasdaq:MFLX) is currently trading at a share price of $23.61, a 3.6% decline. This morning, the company is trading a volume of 25,889 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 debt ratio shows the proportion of assets that a company is financing through debt. MFLX has a debt ratio of 29.4%, which is fairly low. 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.

Increasing 3.3%, Vishay (NYSE:VSH) is trading at $9.88 per share. The company's volume is currently 1.1 million shares for the day, 0.8 times its average over the past three months. 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. 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The debt-equity ratio of 29% is relatively low. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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Tickers in this Article: ARMH, MPWR, FSLR, SWKS, CAVM, MFLX, VSH

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