On a bad day for the market, the Nasdaq has fallen 0.3%, the S&P 500 has slipped 0.3% and the Dow has declined 0.1%.
The Services sector (IYC) is down 0.3%, outperforming the market overall. Currently, the biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|NII Holdings (Nasdaq:NIHD)||$1.23 billion||+12%|
|JC Penney (NYSE:JCP)||$6.37 billion||-8.9%|
|Millennial Media (NYSE:MM)||$1.06 billion||+8.4%|
|Bed Bath & Beyond (Nasdaq:BBBY)||$15.88 billion||-7.5%|
|Dreamworks Animation Skg (Nasdaq:DWA)||$1.48 billion||+5.7%|
|Yelp (NYSE:YELP)||$1.52 billion||+5%|
|Dollar Tree (Nasdaq:DLTR)||$10.78 billion||+5%|
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NII Holdings (Nasdaq:NIHD) is currently at $7.83 per share after a dramatic increase of 12%. The company's volume is currently 10.6 million shares for the day, 2.1 times the 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. 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. NIHD has a capitalization ratio of 59.9%, 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.
JC Penney (NYSE:JCP) is trading at $26.51 per share, down 8.9%. The company's volume for the day so far is 11.5 million shares. This is on pace to reach yesterday's trading volume of 24.5 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for JCP is 86%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Millennial Media (NYSE:MM) has increased to a share price of $15.45, a 8.4% rise. With 379,082 shares changing hands so far today, the company's volume is consistent with its current three-month 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 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. 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/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. MM's stock is trading for more than its book value with a P/B ratio of 8.13. This may be a sign that the company is overvalued. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Slipping 7.5%, Bed Bath & Beyond (Nasdaq:BBBY) is currently trading at $63.66 per share. So far today, 8.6 million shares have changed hands. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 BBBY is 1.75, which is relatively high. This could be a good sign if the share price increases. 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.
After rising 5.7%, Dreamworks Animation Skg (Nasdaq:DWA) is currently trading at a share price of $18.72. At 379,283 shares, the company's volume so far today is 0.8 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for DWA is a low 23.7%. 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.
Yelp (NYSE:YELP) is at $27 per share after an increase of 5%. So far today, 998,060 shares of the company's stock have changed hands. This is on pace to reach yesterday's trading volume of 2.1 million shares. If a stock price moves on high volume, this means that the change is a significant one. 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 calculated by dividing the current stock price by the company's book value per share. The P/B ratio for YELP is 11.74, 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
Dollar Tree (Nasdaq:DLTR) has moved up 5% and is currently trading at $49.39 per share. At 2.5 million shares, the company's volume so far today is 0.9 times the average volume over the last three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios allow the investor to make a quick determination as to a company's investment value. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. DLTR has a high P/S ratio of 1.66. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.