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Tickers in this Article: EDU, MFRM, UNF, NTES, DISH, CTAS, LAMR
The Nasdaq is trading down 0.1%, the S&P 500 is down 0.1% and the Dow has slipped 0.2%, marking a bad morning for the market.

The Services sector (IYC) is up 0.1% on a bad day for the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
New Oriental Education & Tech Grp (ADR) (NYSE:EDU)$3.53 billion-28.4%
Mattress Firm Holding Corp (Nasdaq:MFRM)$1.01 billion-14.5%
UniFirst Corp (NYSE:UNF)$1.36 billion-5.7%
NetEase.com Inc (ADR) (Nasdaq:NTES)$7.38 billion-5.4%
DISH Network (Nasdaq:DISH)$12.42 billion+5.3%
Cintas Corporation (Nasdaq:CTAS)$5.12 billion-5.2%
Lamar Advertising Co (Nasdaq:LAMR)$2.51 billion+5%
Broker Summary: Fidelity Online Brokerage

Taking a 28.4% hit, New Oriental Education & Tech Grp (NYSE:EDU) is currently trading at $15.94 per share. The company's volume is currently 18.7 million shares for the day, 10.4 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Margin analysis is a great way to understand the profitability of companies. EDU's gross profit margin is 60.5%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. The operating profit margin for EDU is 9.5%, high compared to its gross profit margin. A high operating margin indicates a high margin of safety in an investment. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. The company has a net profit margin of 18.3%.

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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for EDU is 27.0, above the industry average of 15.58. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

After a precipitous drop of 14.5%, Mattress (Nasdaq:MFRM) is now trading at a share price of $25.45. The company is trading at a volume of 1.2 million shares. This is more trading activity than there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for MFRM is 97%. 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.

Slipping 5.7%, UniFirst (NYSE:UNF) is currently trading at $64.47 per share. The company's volume for the day so far is 48,338 share, 0.4 times its average over the past three months. 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. UNF has a gross profit margin of 36.3%. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. Relative to its gross profit margin, UNF's operating margin of 13.3% is on the low side. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net profit margin for the company is 7.3%.

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/book value ratio is calculated by dividing the current stock price by the company's book value per share. UNF's P/B ratio of 1.48 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: Using The Price-To-Book Ratio To Evaluate Companies

NetEase.com Inc (Nasdaq:NTES) has decreased to $53.70 per share, a 5.4% fall. The company's volume for the day so far is 826,252 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. NTES' gross profit margin is 73.9%. The operating profit margin is a rough measure of the operating leverage a company can achieve in the conduct of the operational part of its business. The operating margin for NTES is 49.6%, 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. Net margin is 44.9%.

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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. NTES' P/S ratio of 8.58 is on the high side. This could be a good sign if the share price increases. 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.

DISH Network (Nasdaq:DISH) has moved up 5.3% and is currently trading at $29.08 per share. So far today, the company's volume is 2.1 million shares, 1.3 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. DISH has a gross profit margin of 37.9%. 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. With an operating profit margin of 16%, DISH 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. The company has a net profit margin of 9.2%.

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 shows the proportion of assets that a company is financing through debt. DISH has a high debt ratio of 100.5%. This means that most of the company's assets are financed through debt. 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.

Cintas (Nasdaq:CTAS) is trading at $37.38 per share, down 5.2%. The company's volume is currently 1.8 million shares. This is greater than yesterday's volume of 876,123 shares. The trading volume for a stock indicates the level of investor interest. Margin ratios highlight companies that are worth further examination. The gross profit margin for CTAS is 47.3%. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. CTAS' operating profit margin is 13.6%. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. Net profit margin for the company is 7.1%.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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 CTAS is consistent with the industry average at 1.53. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Lamar (Nasdaq:LAMR) has risen 5% to hit a current price of $28.32 per share. With 707,648 shares changing hands so far today, the company's volume is 1.6 times the average volume over the last three months. 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. Margin analysis is a great way to understand the profitability of companies. LAMR has a gross profit margin of 65.5%. A company's operating margin is calculated by dividing operating income by revenues. LAMR has an operating profit margin of 9.7%, high relative to its gross profit margin. The most common reason for high operating margins relative to competitors is a low-cost operating model, which means that a company can deliver merchandise or services to customers at much cheaper prices than competitors and still make money. Net profit margins are those generated from all phases of a business, including taxes. The company has a net profit margin of -0.1%. A negative net profit margin means the company spent more money than it made.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. LAMR has a capitalization ratio of 72.5%, which is on the high end. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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.

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