The market is on the rise this morning. The Nasdaq has climbed 0.7%; the S&P 500 has increased 0.7%; and the Dow is trading up 0.6%.
Underperforming the market overall, the Real Estate Operations sector (IYR) is up 0.6%, and these are its current biggest movers:
|Company||Market Cap||Percentage Change|
|PS Business Parks Inc (NYSE:PSB)||$1.65 billion||+3.1%|
|Jones Lang LaSalle Incorporated (NYSE:JLL)||$3.05 billion||+2.9%|
|Dynex Capital, Inc. (NYSE:DX)||$572.2 million||-2.4%|
|FirstService Corporation (USA) (Nasdaq:FSRV)||$801.1 million||-2%|
|Kilroy Realty Corp (NYSE:KRC)||$3.33 billion||+1.9%|
|Post Properties Inc (NYSE:PPS)||$2.67 billion||+1.8%|
|Alexandria Real Estate Equities Inc (NYSE:ARE)||$4.52 billion||+1.7%|
PS Business Parks (NYSE:PSB) is up 3.1% to reach a current price of $70.37 per share. The company is trading at a volume of 61,244 shares. Yesterday, 174,895 shares changed hands. 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 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 the investor to assess the true value of an individual stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. PSB has a P/B ratio of 2.96 which shows that its share price is higher than its book value. 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 value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Jones Lang LaSalle (NYSE:JLL) has risen 2.9% to hit a current price of $71.81 per share. At 75,644 shares, the company's volume so far today is 0.2 times the 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 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. JLL's P/E ratio of 17.7 is above the industry average of 15.2. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. 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
Dynex Capital (NYSE:DX) is down 2.4% to reach $10.28 per share. So far today, 262,902 shares have changed hands. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. DX's P/S ratio of 5.62 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. 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.
FirstService Corporation (Nasdaq:FSRV) has decreased to $27.35 per share, a 2% fall. So far today, the company's volume is 8,190 shares, 0.3 times the current daily average. 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. FSRV's gross profit margin is 34.4%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. FSRV's operating profit margin is -1.9%. This shows that the company reported a net operating loss in the most recent quarter. 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 4.3%.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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 FSRV is 80.7%, which is relatively high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Kilroy (NYSE:KRC) has moved up 1.9% and is currently trading at $49.71 per share. The company's volume for the day so far is 213,902 shares. This is less trading activity than there was yesterday. 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 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. KRC has a D/E ratio of 112%, which is relatively high. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Post Properties (NYSE:PPS) is currently trading at $50.31 per share, a 1.8% increase. The company's volume is currently 209,142 shares for the day, 0.2 times its average over the past three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for PPS is 46.5%. 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.
Rising 1.7%, Alexandria Real Estate Equities (NYSE:ARE) is currently trading at $73.97 per share. The company is currently trading a volume of 50,266 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. ARE has a dividend yield of 2.8%. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Due Diligence On Dividends
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.