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Biggest Consumer Cyclical Sector Movers for July 12, 2012
The market has been slipping so far today. The Nasdaq has fallen 1.3%; the S&P 500 is trading down 0.8%; and the Dow has declined 0.5%. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.
The Consumer Cyclical sector (XLY) is down 0.7%, outperforming the market overall. Currently, the biggest movers in the sector are:
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Westport Innovations Inc (Nasdaq:WPRT) is currently trading at a share price of $32.52, a 4.1% decline. The company's volume is currently 652,509 shares. Yesterday, 1.2 million shares changed hands. 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. 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. WPRT's operating profit margin is -13%. This is because the company reported a net operating loss in the most recent quarter.
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 is a leverage ratio. The debt-equity ratio of 25% is relatively low. 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.
Tesla Motors (Nasdaq:TSLA) has risen 3.5% to hit a current price of $32.60 per share. At 519,945 shares, the company's volume so far today is 0.5 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The gross profit margin for TSLA is 38.5%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. TSLA has a negative operating margin of -294.2%. This means that the company came in with a net operating loss in the most recent quarter.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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. TSLA's capitalization ratio of 68.9% is relatively high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Slipping 3.1%, Sturm, Ruger (NYSE:RGR) is currently trading at $40.30 per share. So far today, 234,949 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. RGR's gross profit margin is 38.9%. The operating profit margin indicates how much EBIT is generated per dollar of sales. With an operating profit margin of 21.7%, RGR has a low one relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net profit margin for the company is 13%.
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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for RGR is 3.1%. 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: Due Diligence On Dividends
Cascade (NYSE:CASC) has fallen 3% and is currently trading at $47.16 per share. With 30,448 shares changing hands so far today, the company's volume is 0.5 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. 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. CASC has a gross profit margin of 33%. Relative to its gross profit margin, CASC's operating profit margin of 14.6% and net profit margin of 11.4% 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. PEG ratio for CASC is 0.47. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Currently trading at $135.15 per share, Polo Ralph Lauren (NYSE:RL) has fallen 2.6%. The company's volume for the day so far is 453,671 shares. Trading activity is down from yesterday when 1.7 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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 RL is 3.43, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
At $46.84, WABCO Holdings (NYSE:WBC) has slipped 2.6%. At 281,297 shares, the company's volume so far today is 0.5 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin ratios highlight companies that are worth further examination. The gross profit margin for WBC is 31.9%. WBC's operating margin of 13.6% and net margin of 12% are low relative to its gross margin.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. WBC's P/E ratio of 10.6 is under the industry average of 16.44. 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: Can Investors Trust the P/E Ratio?
PVH (NYSE:PVH) is down 2.5% to reach $73.63 per share. So far today, the company's volume is 288,272 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. PVH's gross profit margin is 51.8%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. Operating profit margin for PVH is 10.7%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net margin is 5.9%.
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. 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. PVH's P/S ratio of 1.05 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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 Consumer Cyclical sector (XLY) is down 0.7%, outperforming the market overall. Currently, the biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Westport Innovations Inc. (USA) (Nasdaq:WPRT) | $1.86 billion | -4.1% |
| Tesla Motors Inc (Nasdaq:TSLA) | $3.32 billion | +3.5% |
| Sturm, Ruger & Company (NYSE:RGR) | $796.5 million | -3.1% |
| Cascade Corporation (NYSE:CASC) | $542.2 million | -3% |
| Polo Ralph Lauren (NYSE:RL) | $8.41 billion | -2.6% |
| WABCO Holdings Inc. (NYSE:WBC) | $3.1 billion | -2.6% |
| PVH Corp (NYSE:PVH) | $5.32 billion | -2.5% |
Westport Innovations Inc (Nasdaq:WPRT) is currently trading at a share price of $32.52, a 4.1% decline. The company's volume is currently 652,509 shares. Yesterday, 1.2 million shares changed hands. 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. 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. WPRT's operating profit margin is -13%. This is because the company reported a net operating loss in the most recent quarter.
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 is a leverage ratio. The debt-equity ratio of 25% is relatively low. 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.
Tesla Motors (Nasdaq:TSLA) has risen 3.5% to hit a current price of $32.60 per share. At 519,945 shares, the company's volume so far today is 0.5 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The gross profit margin for TSLA is 38.5%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. TSLA has a negative operating margin of -294.2%. This means that the company came in with a net operating loss in the most recent quarter.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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. TSLA's capitalization ratio of 68.9% is relatively high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Slipping 3.1%, Sturm, Ruger (NYSE:RGR) is currently trading at $40.30 per share. So far today, 234,949 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. RGR's gross profit margin is 38.9%. The operating profit margin indicates how much EBIT is generated per dollar of sales. With an operating profit margin of 21.7%, RGR has a low one relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net profit margin for the company is 13%.
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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for RGR is 3.1%. 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: Due Diligence On Dividends
Cascade (NYSE:CASC) has fallen 3% and is currently trading at $47.16 per share. With 30,448 shares changing hands so far today, the company's volume is 0.5 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. 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. CASC has a gross profit margin of 33%. Relative to its gross profit margin, CASC's operating profit margin of 14.6% and net profit margin of 11.4% are low.
Currently trading at $135.15 per share, Polo Ralph Lauren (NYSE:RL) has fallen 2.6%. The company's volume for the day so far is 453,671 shares. Trading activity is down from yesterday when 1.7 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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 RL is 3.43, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
At $46.84, WABCO Holdings (NYSE:WBC) has slipped 2.6%. At 281,297 shares, the company's volume so far today is 0.5 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin ratios highlight companies that are worth further examination. The gross profit margin for WBC is 31.9%. WBC's operating margin of 13.6% and net margin of 12% are low relative to its gross margin.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. WBC's P/E ratio of 10.6 is under the industry average of 16.44. 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: Can Investors Trust the P/E Ratio?
PVH (NYSE:PVH) is down 2.5% to reach $73.63 per share. So far today, the company's volume is 288,272 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. PVH's gross profit margin is 51.8%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. Operating profit margin for PVH is 10.7%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net margin is 5.9%.
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. 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. PVH's P/S ratio of 1.05 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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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