Filed Under: ,
Tickers in this Article: CDE, BVN, AEM, AU, GG, NEM, ABX
This morning's trading has marked a bad day for the market so far. The Nasdaq is down 1.7%; the S&P 500 is trading down 1.3%; and the Dow has slipped 1.4%.

The Gold and Silver sector (SLV) is currently lagging behind the overall market, down 2.2%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Coeur d\'Alene Mines Corporation (NYSE:CDE)$1.59 billion-4.3%
Compania de Minas Buenaventura SA (ADR) (NYSE:BVN)$9.84 billion-3.1%
Agnico-Eagle Mines Limited (USA) (NYSE:AEM)$7.15 billion-3.1%
AngloGold Ashanti Limited (ADR) (NYSE:AU)$13.07 billion-2.5%
Goldcorp Inc. (USA) (NYSE:GG)$31.39 billion-2.5%
Newmont Mining (NYSE:NEM)$24.06 billion-2.4%
Barrick Gold Corporation (USA) (NYSE:ABX)$38.12 billion-2.3%
Forex Broker Summary: UFXMarkets

Falling 4.3%, Coeur d'Alene (NYSE:CDE) is currently at a share price of $16.97. The company's volume is currently 616,584 shares. This is below yesterday's volume of 1.1 million 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. The gross profit margin for CDE is 57.6%. A company's operating margin is calculated by dividing operating income by revenues. CDE has an operating profit margin of 21.6%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. The company has a net profit margin of 8.3%.

Valuation ratios like 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 are useful in determining how attractive a potential or existing investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CDE's debt ratio of 33.6% is on the low side. 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.

Slipping 3.1%, Compania de Minas Buenaventura SA (NYSE:BVN) is currently trading at $37.48 per share. So far today, the company's volume is 187,638 shares, 0.3 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Margin ratios highlight companies that are worth further examination. BVN's gross profit margin is 62.3%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. The company has a net profit margin of 54.4%, which is low relative to its gross profit margin. A low profit margin may indicate a pricing strategy. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. BVN's operating profit margin is 34.9%.

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 measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The debt-equity ratio of 4% 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. 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.

Agnico-Eagle Mines Limited (NYSE:AEM) is currently trading at a share price of $40.52, a 3.1% decline. This morning, the company is trading a volume of 544,635 shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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. The gross profit margin for AEM is 48.2%. The operating profit margin indicates how much EBIT is generated per dollar of sales. AEM has an operating profit margin of 29%, which is low 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. The company has a negative net profit margin of -28.4%. A negative net profit margin means the company spent more money than it made.

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 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 AEM is a high 3.03. 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.

At $33.35, AngloGold Ashanti Limited (NYSE:AU) has slipped 2.5%. At 601,580 shares, the company's volume so far today is 0.3 times the current three-month average. Volume is an important indicator because it indicates how significant a price shift is. 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. AU's gross profit margin is 51.7%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. The operating margin for AU is 31.7%, which is low compared its gross profit margin. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company's net profit margin is 22.9%.

Valuation ratios allow the investor to make a quick determination as to a company's investment value. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. AU has a P/E ratio of 10.6. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Currently trading at $37.79 per share, Goldcorp Inc (NYSE:GG) has fallen 2.5%. So far today, the company's volume is 1.3 million shares. This is less trading activity than there was yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. Margin analysis is a great way to understand the profitability of companies. GG has a gross profit margin of 61.3%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. GG's operating profit margin of 38.5% is low relative to its gross profit margin. Net profit margins are those generated from all phases of a business, including taxes. Net margin is 31.1%.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. The capitalizion ratio of 3.3% is on the low end. Low leverage is a significant balance sheet strength, a sign of a less risky investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Newmont Mining (NYSE:NEM) is trading at $47.87 per share, down 2.4%. At 1.1 million shares, the company's volume so far today is 0.2 times the current daily average. 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. The gross profit margin for NEM is 58.9%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. With an operating profit margin of 39.3%, NEM has a low one relative to its gross profit margin. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. Relative to its gross profit margin, the company has a high net profit margin of 8.6%. Companies with high net profit margins have a bigger cushion to protect themselves during the hard times.

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. NEM's stock is trading for more than its book value with a P/B ratio of 1.8. 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. 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: Investment Valuation Ratios: Price/Book Value Ratio

Barrick Gold Corporation (NYSE:ABX) has decreased to $37.24 per share, a 2.3% fall. So far today, the company's volume is 2.4 million shares. 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 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. ABX has a gross profit margin of 62.7%. 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. The operating margin for ABX is 42.3%, which is low compared its gross profit margin. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. The company has a net profit margin of 30.6%.

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 dividend yield is calculated by dividing a company's dividends per share by its stock price. ABX has a dividend yield of 2.1%. 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: Dividend Yield For The Downturn

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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

comments powered by Disqus

Trading Center