After the morning's trading, the Nasdaq has risen 0.4%, the S&P 500 remains relatively unchanged and the Dow has moved little. 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 trading up 0.7% so far today and here are its biggest movers:


CompanyMarket CapPercentage Change
RealD (NYSE:RLD)$688.3 million-21.4%
Dorman Products Inc. (Nasdaq:DORM)$900.1 million+8.3%
Goodyear (NYSE:GT)$2.54 billion+8.2%
TRW Automotive Holdings Corp. (NYSE:TRW)$4.47 billion+5.4%
G-III Apparel Group, Ltd. (Nasdaq:GIII)$524 million-4.2%
Delphi Automotive PLC (NYSE:DLPH)$9.19 billion+2.6%
Williams-Sonoma, Inc. (NYSE:WSM)$3.51 billion-2.5%
Broker Summary: Fidelity Online Brokerage

Taking a 21.4% hit, RealD (NYSE:RLD) is currently trading at $9.90 per share. So far today, the company's volume is 2.5 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). Relative to the industry P/E ratio of 45.08, RLD's 19.7 is low. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Dorman Products (Nasdaq:DORM) has risen 8.3% and is currently trading at $26.94 per share. So far today, the company's volume is 150,114 shares, 1.6 times its average over the past three months. A stock's volume conveys how excited investors are about it. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. DORM's stock is trading for more than its book value with a P/B ratio of 2.93. 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: Using The Price-To-Book Ratio To Evaluate Companies

Goodyear (NYSE:GT) has risen 8.2% to hit a current price of $11.22 per share. The company's volume is currently 8.1 million shares. This is greater than yesterday's volume of 6.8 million 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. GT's P/S ratio of 0.12 is fairly low. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. 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 an increase of 5.4%, TRW Automotive (NYSE:TRW) has reached a current price of $38.37. The company's volume is currently 1.2 million shares for the day, 0.8 times the average daily volume. 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. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. TRW's debt ratio of 69.8% is fairly high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

G-III Apparel (Nasdaq:GIII) is down 4.2% to reach $25.13 per share. The company is currently trading a volume of 33,172 shares. If a stock price moves on high volume, this means that the change is a significant one. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The debt-equity ratio of 23% is relatively low. 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.

Rising 2.6%, Delphi (NYSE:DLPH) is currently trading at $28.72 per share. At 1.6 million shares, the company's volume so far today is 0.9 times the average volume over the last three months. In technical analysis, trading volume is used to determine the strength of a market indicator. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. DLPH's capitalization ratio is 48%. 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.

Williams-Sonoma (NYSE:WSM) has fallen 2.5% and is currently trading at $34.43 per share. The company is trading at a volume of 690,222 shares. Yesterday's volume was only 526,857 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. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). WSM is in line with the industry average with a P/E ratio of 15.8. 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 Find P/E And PEG Ratios

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.



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Tickers in this Article: RLD, DORM, GT, TRW, GIII, DLPH, WSM

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