The Nasdaq has fallen 0.1%, the S&P 500 is down 0.1% and the Dow has declined 0.1%, marking a bad morning for the market.
The Semiconductors sector (XLK) is down 0.2%, underperforming the market overall. The current biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|EZchip (Nasdaq:EZCH)||$933.2 million||+7.5%|
|KLA-Tencor (Nasdaq:KLAC)||$8.82 billion||-3.5%|
|ASML Holding N.V (Nasdaq:ASML)||$23.68 billion||-3.5%|
|Freescale Semiconductor Holdings (NYSE:FSL)||$2.59 billion||-3.4%|
|Universal (Nasdaq:PANL)||$1.82 billion||+3.4%|
|NXP (Nasdaq:NXPI)||$6.08 billion||-2%|
|Spreadtrum Communications, Inc (Nasdaq:SPRD)||$917.3 million||-1.4%|
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Rising 7.5%, EZchip (Nasdaq:EZCH) is currently trading at $35.81 per share. So far today, 325,256 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. 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/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for EZCH is 4.48. 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.
KLA-Tencor (Nasdaq:KLAC) is down 3.5% to reach $51.13 per share. At 1.7 million shares, the company's volume so far today is 1.1 times the average daily volume. The trading volume for a stock indicates the level of investor interest. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. KLAC's P/B ratio of 2.57 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. 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: Using The Price-To-Book Ratio To Evaluate Companies
Slipping 3.5%, ASML Holding N.V (Nasdaq:ASML) is currently trading at $56.01 per share. The company's volume for the day so far is two million shares. This is greater than yesterday's volume of 1.1 million shares. A stock's volume conveys how excited investors are about it. 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. Dividend yield measures the income that a stock will generate for an investor. ASML has a dividend yield of 0.9%, which is fairly low. A company with a low dividend yield may be a safer investment in the long run. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
After a decline of 3.4%, Freescale Semiconductor Holdings (NYSE:FSL) has hit a share price of $10.09. At 298,997 shares, the company's volume so far today is 0.3 times the current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. FSL has a debt ratio of 228.6%, which is on the high side. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Universal (Nasdaq:PANL) has risen 3.4% to hit a current price of $40.60 per share. The company's volume for the day so far is 621,535 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for PANL is 20.08, which is relatively high. This could be a good sign if the share price increases. 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.
NXP (Nasdaq:NXPI) is currently trading at a share price of $24.02, a 2% decline. The company's volume is currently 1.6 million shares for the day, 0.8 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. NXPI has a capitalization ratio of 78.8%, which is on the high end. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Falling 1.4%, Spreadtrum Communications, Inc (Nasdaq:SPRD) is currently at a share price of $19.25. So far today, the company's volume is 166,711 shares. At this rate, trading activity will likely be down from yesterday when 592,077 shares changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. SPRD's debt-equity ratio of 23% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. 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. 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.
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