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Tickers in this Article: AMD, ASML, CYMI, CRUS, EZCH, NXPI, ARMH
The Nasdaq is down 0.5%, the S&P 500 has decreased 0.2% and the Dow has moved up 0.1% after the morning's trading.

The biggest movers in the Semiconductors sector (XLK) (+0.5%) are:
CompanyMarket CapPercentage Change
Advanced Micro (NYSE:AMD).94 billion-10.8%
ASML Holding N.V. (ADR) (Nasdaq:ASML).9 billion+9%
Cymer, Inc. (Nasdaq:CYMI).75 billion+8.8%
Cirrus Logic, Inc. (Nasdaq:CRUS).83 billion-6.6%
EZchip Semiconductor Ltd. (Nasdaq:EZCH).03 billion-4.2%
NXP Semiconductors NV (Nasdaq:NXPI).49 billion-4%
ARM Holdings plc (ADR) (Nasdaq:ARMH).52 billion-2.9%
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Shares of Advanced Micro (NYSE:AMD) are currently trading at $5.01, a steep decline of 10.8%. At 56.9 million shares, the company's volume so far today is 4.5 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. 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. AMD's gross profit margin is 38.9%. The operating and net profit margins for AMD are both negative. This is because the company reported a net loss and net operating loss in the most recent quarter.

Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. AMD's P/B ratio of 3.34 shows that its share price is higher 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: Investment Valuation Ratios: Price/Book Value Ratio

After rising 9%, ASML Holding N.V (Nasdaq:ASML) is currently trading at a share price of $52.83. This morning, the company is trading a volume of 5.8 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. 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. ASML has a gross profit margin of 45.8%. ASML's operating margin of 25.8% and net margin of 24.9% are low relative to its gross margin.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. ASML has a low dividend yield of 1.1%. A company with a low dividend yield may be a safer investment in the long run. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Investment Valuation Ratios: Dividend Yield

Rising 8.8%, Cymer (Nasdaq:CYMI) is currently trading at $61.71 per share. So far today, the company's volume is 840,828 shares, 2.8 times its current daily average. If a stock price moves on high volume, this means that the change is a significant one. Margin ratios highlight companies that are worth further examination. CYMI's gross profit margin is 54.7%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Operating profit margin for CYMI is 11.1%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net margin is 12.4%.

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. 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. CYMI has a high P/S ratio of 2.62. 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 $26.51, Cirrus Logic (Nasdaq:CRUS) has slipped 6.6%. The company's volume is currently 1.8 million shares. Yesterday, volume was only 1.4 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CRUS has a low debt ratio of 14.4%. A low debt ratio means the company has more available cash flow. 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.

Currently trading at $35.35 per share, EZchip (Nasdaq:EZCH) has fallen 4.2%. So far today, the company's volume is 210,159 shares, 0.7 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. 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 EZCH is 65.4%. 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. EZCH has an operating profit margin of 31.5%. 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 17.9%.

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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. EZCH has a P/E ratio of 96.9, high compared to the industry average of 27.52. This could mean that the market is expecting big things over the next few months or years. 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 Find P/E And PEG Ratios

NXP (Nasdaq:NXPI) has decreased to $21.25 per share, a 4% fall. The company is currently trading a volume of 659,870 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. 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. NXPI's gross profit margin is 58.8%. Relative to its gross profit margin, NXPI's operating profit margin of 5.6% and net profit margin of 5.5% are high.

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 price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). NXPI's PEG ratio of 1.38 is in line with the industry average. 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.

ARM Holdings plc (Nasdaq:ARMH) is currently trading at a share price of $22.27, a 2.9% decline. So far today, the company's volume is 1.5 million shares, 0.8 times the 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 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. 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. ARMH has a high gross profit margin of 94.4%. This may indicate that the company is over-pricing its products and/or services. ARMH has an operating profit margin of 36.5% and a net profit margin of 25.3%, both high compared to its gross profit margin.

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 price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for ARMH is 5.85, indicating that the stock is trading for more than its book value. 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. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies

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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