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Basic Materials Sector's Biggest Movers for June 28, 2012
This morning's trading has marked a bad day for the market so far. The Nasdaq has decreased 1.5%; the S&P 500 has slipped 0.9%; and the Dow is trading down 1%. 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 currently ahead of the overall market, down only 0.8%, and its biggest movers are currently:
Broker Summary: Charles Schwab Online Brokerage
Worthington Industries (NYSE:WOR) has moved up 5% and is currently trading at $18.51 per share. At 677,681 shares, the company's volume so far today is consistent with its average over the last three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. WOR has a low gross profit margin of 15.7%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, WOR's operating profit margin of 3% and net profit margin of 4.7% are low.
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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. WOR has a P/B ratio of 1.87 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. 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: How Buybacks Warps The Price-To-Book Ratio
Currently trading at $38.74 per share, Agnico-Eagle Mines Limited (NYSE:AEM) has fallen 3.6%. The company's volume is currently 817,927 shares. This is less trading activity than there was yesterday. 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. Margin analysis is a great way to understand the profitability of companies. AEM's gross profit margin is 48.2%. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. AEM has an operating profit margin of 29%, which is low relative to its gross profit margin. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. Net profit margin is -28.4%. This shows that the company reported a net loss in the most recent quarter.
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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. AEM has a low dividend yield of 2%. A company with a low dividend yield may be a safer investment in the long run. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Investment Valuation Ratios: Dividend Yield
Terra Nitrogen Company (NYSE:TNH) has fallen 3.3% and is currently trading at $213.55 per share. At 31,804 shares, the company's volume so far today is 0.6 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. The gross profit margin for TNH is 68.5%. Operating margin for TNH is 63.1% and net margin is 63.9%, both low relative to its gross margin.
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/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 TNH is 5.86, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Domtar Corp (NYSE:UFS) is trading at $75.27 per share, down 2.9%. The company is currently trading a volume of 192,469 shares. 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. 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. UFS has a low gross profit margin of 24.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. Relative to its gross profit margin, UFS' operating profit margin of 7.8% and net profit margin of 4.7% are low.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for UFS is 11.5, below the industry average of 13.32. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Profit With The Power Of Price-To-Earnings
Slipping 2.4%, Schweitzer-Mauduit International (NYSE:SWM) is currently trading at $65.15 per share. With 17,159 shares changing hands so far today, the company's volume is 0.1 times its average over the past three months. 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. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. SWM has a gross profit margin of 35.5%. SWM has an operating profit margin of 12.1% and a net profit margin of 10.9%, 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. The debt-equity (D/E) ratio is a leverage ratio. SWM has a debt-equity ratio of 31%, which is on the low side. This shows that the company's assets are financed primarily through equity. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
After a decline of 2.4%, Parker-Hannifin (NYSE:PH) has hit a share price of $73.09. So far today, 607,634 shares of the company's stock have changed hands. This is below yesterday's volume of 1.4 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. PH's gross profit margin is 28.5%. PH's operating margin of 12.5% and net margin of 8.7% are low relative to its gross margin.
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. 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. PH's capitalization ratio is 21.4%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Schnitzer Steel Industries (Nasdaq:SCHN) has increased to a share price of $25.44, a 2.2% rise. At 183,751 shares, the company's volume so far today is 0.2 times the current daily average. 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. 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. SCHN has a low gross profit margin of 11.9%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Compared with its gross profit margin, SCHN's operating profit margin of 2% and net profit margin of 2.4% are low.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for SCHN is a low 40.7%. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Basic Materials sector (XLB) is currently ahead of the overall market, down only 0.8%, and its biggest movers are currently:
| Company | Market Cap | Percentage Change |
| Worthington Industries, Inc. (NYSE:WOR) | $1.23 billion | +5% |
| Agnico-Eagle Mines Limited (USA) (NYSE:AEM) | $6.88 billion | -3.6% |
| Terra Nitrogen Company, L.P. (NYSE:TNH) | $4.09 billion | -3.3% |
| Domtar Corp. (USA) (NYSE:UFS) | $3.3 billion | -2.9% |
| Schweitzer-Mauduit International, Inc. (NYSE:SWM) | $1.04 billion | -2.4% |
| Parker-Hannifin (NYSE:PH) | $11.31 billion | -2.4% |
| Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) | $679.3 million | +2.2% |
Worthington Industries (NYSE:WOR) has moved up 5% and is currently trading at $18.51 per share. At 677,681 shares, the company's volume so far today is consistent with its average over the last three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. WOR has a low gross profit margin of 15.7%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, WOR's operating profit margin of 3% and net profit margin of 4.7% are low.
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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. WOR has a P/B ratio of 1.87 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. 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: How Buybacks Warps The Price-To-Book Ratio
Currently trading at $38.74 per share, Agnico-Eagle Mines Limited (NYSE:AEM) has fallen 3.6%. The company's volume is currently 817,927 shares. This is less trading activity than there was yesterday. 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. Margin analysis is a great way to understand the profitability of companies. AEM's gross profit margin is 48.2%. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. AEM has an operating profit margin of 29%, which is low relative to its gross profit margin. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. Net profit margin is -28.4%. This shows that the company reported a net loss in the most recent quarter.
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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. AEM has a low dividend yield of 2%. A company with a low dividend yield may be a safer investment in the long run. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Investment Valuation Ratios: Dividend Yield
Terra Nitrogen Company (NYSE:TNH) has fallen 3.3% and is currently trading at $213.55 per share. At 31,804 shares, the company's volume so far today is 0.6 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. The gross profit margin for TNH is 68.5%. Operating margin for TNH is 63.1% and net margin is 63.9%, both low relative to its gross margin.
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/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 TNH is 5.86, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for UFS is 11.5, below the industry average of 13.32. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Profit With The Power Of Price-To-Earnings
Slipping 2.4%, Schweitzer-Mauduit International (NYSE:SWM) is currently trading at $65.15 per share. With 17,159 shares changing hands so far today, the company's volume is 0.1 times its average over the past three months. 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. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. SWM has a gross profit margin of 35.5%. SWM has an operating profit margin of 12.1% and a net profit margin of 10.9%, 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. The debt-equity (D/E) ratio is a leverage ratio. SWM has a debt-equity ratio of 31%, which is on the low side. This shows that the company's assets are financed primarily through equity. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
After a decline of 2.4%, Parker-Hannifin (NYSE:PH) has hit a share price of $73.09. So far today, 607,634 shares of the company's stock have changed hands. This is below yesterday's volume of 1.4 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. PH's gross profit margin is 28.5%. PH's operating margin of 12.5% and net margin of 8.7% are low relative to its gross margin.
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. 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. PH's capitalization ratio is 21.4%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Schnitzer Steel Industries (Nasdaq:SCHN) has increased to a share price of $25.44, a 2.2% rise. At 183,751 shares, the company's volume so far today is 0.2 times the current daily average. 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. 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. SCHN has a low gross profit margin of 11.9%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Compared with its gross profit margin, SCHN's operating profit margin of 2% and net profit margin of 2.4% are low.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for SCHN is a low 40.7%. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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