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Basic Materials Sector's Biggest Movers for July 12, 2012
The Nasdaq is trading down 1.3%, the S&P 500 has decreased 0.8% and the Dow has slipped 0.5%, marking a bad morning for the market. The basic materials sector is the category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. This sector includes the mining and refining of metals, chemical producers and forestry products. The basic materials sector is sensitive to changes in the business cycle. Because the sector supplies materials for construction, it depends on a strong economy. This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as gold or other metals, is largely demand driven.
The Basic Materials sector (XLB) is down 1.2%, outperforming the market overall. Currently, the biggest movers in the sector are:
Forex Broker Summary: Forex Capital Markets (FXCM)
Reliance Steel (NYSE:RS) has fallen 4.8% and is currently trading at $47.50 per share. This morning, the company is trading a volume of 353,039 shares. A stock's volume conveys how excited investors are about it. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. RS has a low gross profit margin of 24.2%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Relative to its gross profit margin, RS' operating profit margin of 8.1% and net profit margin of 4.3% are low.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Dividend yield measures the income that a stock will generate for an investor. RS' dividend yield of 1.2% is fairly low. This may indicate that the company's stock is overpriced. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Guide To Stock-Picking Strategies: Income Investing
Rio Tinto plc (NYSE:RIO) is currently trading at a share price of $45.16, a 3.8% decline. With 1.8 million shares changing hands so far today, the company's volume is 0.7 times its current three-month average. 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for RIO is 44%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. Operating profit margin for RIO is 0%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. Net profit margin for the company is 11.2%.
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. A price/sales ratio is derived by dividing stock market price by company sales. RIO's P/S ratio of 1.53 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. 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.
BHP Billiton (NYSE:BHP) is trading at $61.17 per share, down 3.5%. This morning, the company's volume is 1.8 million shares. This is 0.7 times its average daily volume. 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 provide investors with an estimation, albeit a simplistic one, of the value of a 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. BHP's debt ratio of 48.8% 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
At $54.07, BHP Billiton plc (NYSE:BBL) has slipped 3.5%. The company's volume is currently 737,142 shares for the day, above yesterday's volume of 620,627 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. BBL's debt-equity ratio of 40% 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Falling 3.3%, POSCO (NYSE:PKX) is currently at a share price of $78.09. So far today, the company's volume is 155,081 shares. 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 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. 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. 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. PKX's capitalization ratio is 29.2%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
After a decline of 3%, Terra Nitrogen Company (NYSE:TNH) has hit a share price of $206.60. The company's volume for the day so far is 35,491 share, 0.9 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. TNH's gross profit margin is 68.5%. Compared with its gross profit margin, TNH's operating profit margin of 63.1% and net profit margin of 63.9% are low.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. The P/B ratio for TNH is 15.77, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
NewMarket (NYSE:NEU) has fallen 2.1% and is currently trading at $219.15 per share. The company's volume for the day so far is 8,105 shares. This is 0.1 times its current daily average. Volume is an important indicator because it indicates how significant a price shift is. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for NEU is 26.7%. NEU has an operating profit margin of 18.6% and a net profit margin of 10.2%, both low compared to its gross profit margin.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. NEU is in line with the industry average with a P/E ratio of 13.5. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio
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.
The Basic Materials sector (XLB) is down 1.2%, outperforming the market overall. Currently, the biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Reliance Steel & Aluminum (NYSE:RS) | $3.75 billion | -4.8% |
| Rio Tinto plc (ADR) (NYSE:RIO) | $92.27 billion | -3.8% |
| BHP Billiton (NYSE:BHP) | $169.47 billion | -3.5% |
| BHP Billiton plc (ADR) (NYSE:BBL) | $149.79 billion | -3.5% |
| POSCO (ADR) (NYSE:PKX) | $24.95 billion | -3.3% |
| Terra Nitrogen Company, L.P. (NYSE:TNH) | $3.94 billion | -3% |
| NewMarket Corporation (NYSE:NEU) | $3 billion | -2.1% |
Reliance Steel (NYSE:RS) has fallen 4.8% and is currently trading at $47.50 per share. This morning, the company is trading a volume of 353,039 shares. A stock's volume conveys how excited investors are about it. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. RS has a low gross profit margin of 24.2%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Relative to its gross profit margin, RS' operating profit margin of 8.1% and net profit margin of 4.3% are low.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Dividend yield measures the income that a stock will generate for an investor. RS' dividend yield of 1.2% is fairly low. This may indicate that the company's stock is overpriced. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Guide To Stock-Picking Strategies: Income Investing
Rio Tinto plc (NYSE:RIO) is currently trading at a share price of $45.16, a 3.8% decline. With 1.8 million shares changing hands so far today, the company's volume is 0.7 times its current three-month average. 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for RIO is 44%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. Operating profit margin for RIO is 0%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. Net profit margin for the company is 11.2%.
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. A price/sales ratio is derived by dividing stock market price by company sales. RIO's P/S ratio of 1.53 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. 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.
BHP Billiton (NYSE:BHP) is trading at $61.17 per share, down 3.5%. This morning, the company's volume is 1.8 million shares. This is 0.7 times its average daily volume. 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 provide investors with an estimation, albeit a simplistic one, of the value of a 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. BHP's debt ratio of 48.8% 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
At $54.07, BHP Billiton plc (NYSE:BBL) has slipped 3.5%. The company's volume is currently 737,142 shares for the day, above yesterday's volume of 620,627 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. BBL's debt-equity ratio of 40% 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Falling 3.3%, POSCO (NYSE:PKX) is currently at a share price of $78.09. So far today, the company's volume is 155,081 shares. 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 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. 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. 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. PKX's capitalization ratio is 29.2%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
After a decline of 3%, Terra Nitrogen Company (NYSE:TNH) has hit a share price of $206.60. The company's volume for the day so far is 35,491 share, 0.9 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. TNH's gross profit margin is 68.5%. Compared with its gross profit margin, TNH's operating profit margin of 63.1% and net profit margin of 63.9% are low.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. The P/B ratio for TNH is 15.77, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
NewMarket (NYSE:NEU) has fallen 2.1% and is currently trading at $219.15 per share. The company's volume for the day so far is 8,105 shares. This is 0.1 times its current daily average. Volume is an important indicator because it indicates how significant a price shift is. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for NEU is 26.7%. NEU has an operating profit margin of 18.6% and a net profit margin of 10.2%, both low compared to its gross profit margin.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. NEU is in line with the industry average with a P/E ratio of 13.5. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio
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.
by
Investopedia Staff
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