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Tickers in this Article: RXN, SEE, CHMT, MT, AIN, WLK, PH
The market is having a bad day so far: the Nasdaq is down 0.4%; the S&P 500 is trading down 0.8%; and the Dow has slipped 0.8%. 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 1.4%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Rexnord Corp (NYSE:RXN)$1.84 billion-17.6%
Sealed Air Corp (NYSE:SEE)$3.07 billion-16.2%
Chemtura Corporation (NYSE:CHMT)$1.28 billion+15.3%
ArcelorMittal (NYSE:MT)$24.71 billion-9.7%
Albany International Corp. (NYSE:AIN)$557.8 million+9.3%
Westlake Chemical Corporation (NYSE:WLK)$3.96 billion+5.9%
Parker-Hannifin (NYSE:PH)$12.32 billion-5.8%
Forex Broker Summary: UFXMarkets

Taking a 17.6% hit, Rexnord (NYSE:RXN) is currently trading at $15.87 per share. The company's volume is currently one million shares for the day, 4.8 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. RXN has a P/E ratio of 45.9, high compared to the industry average of 20.38. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Sealed Air (NYSE:SEE) is at a share price of $13.24 after a sharp decline of 16.2%. The company is trading at a volume of 7.5 million shares. Yesterday's volume was only 2.5 million shares. 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. 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 SEE is 2.9. 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.

Chemtura (NYSE:CHMT) is trading at $14.98 per share, a significant rise of 15.3%. The company's volume is currently 1.2 million shares for the day, 1.6 times its 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 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. CHMT has a P/S ratio of 0.55, on the low end. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. 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.

ArcelorMittal (NYSE:MT) is currently trading at a share price of $14.41, a 9.7% decline. This morning, the company is trading a volume of 9.4 million 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 is calculated by dividing total liabilities by total assets. MT's debt ratio is 54.1%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

After rising 9.3%, Albany (NYSE:AIN) is currently trading at a share price of $19.47. With 131,556 shares changing hands so far today, the company's volume is 0.9 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. A company's value as an investment is more easily 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-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. AIN has a D/E ratio of 68%. 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.

Westlake (NYSE:WLK) has risen 5.9% and is currently trading at $62.97 per share. So far today, 594,740 shares of the company's stock have changed hands. Yesterday, volume was only 396,217 shares. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. WLK's capitalization ratio is 29.1%, which is relatively low. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. 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.

Parker-Hannifin (NYSE:PH) has decreased to $76.79 per share, a 5.8% fall. The company's volume is currently 1.8 million shares for the day, 1.1 times the current daily average. A stock's volume conveys how excited investors are about it. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. PH's stock is trading for more than its book value with a P/B ratio of 2.08. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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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