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Tickers in this Article: LQDT, BBY, IT, DLTR, GNC, TRIP, LULU
It's been a bad day for the market after the morning's trading. The Nasdaq has declined 0.2%; the S&P 500 has slipped 0.2%; and the Dow has fallen 0.5%.

On a bad day for the market overall, the Services sector (IYC) has shown little change and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Liquidity Services, Inc. (Nasdaq:LQDT).6 billion-21.5%
Best Buy (NYSE:BBY).12 billion+10%
Gartner, Inc. (NYSE:IT).02 billion+4%
Dollar Tree (Nasdaq:DLTR).48 billion-3.9%
GNC Holdings Inc (NYSE:GNC).18 billion+3.7%
Tripadvisor Inc (Nasdaq:TRIP) billion+3.6%
Lululemon Athletica inc. (Nasdaq:LULU).36 billion-3.4%
Forex Broker Summary: UFXMarkets

Taking a 21.5% hit, Liquidity Services (Nasdaq:LQDT) is currently trading at $40.17 per share. The company's volume for the day so far is 2.8 million shares. Volume indicates the level of interest that investors have in a company at its current price. Margin ratios highlight companies that are worth further examination. LQDT has a gross profit margin of 61.1%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. With a net profit margin of 7.7%, the company has a high one compared to its gross profit margin. Investors in companies with high profit margins can be confident that even if sales dip slightly, profits will remain strong. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. Operating profit margin for LQDT is 25.3%.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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 17% 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. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Best (NYSE:BBY) has risen 10% and is currently trading at $23.05 per share. The company's volume is currently 15.5 million shares for the day, 1.7 times the average daily volume. A stock's volume conveys how excited investors are about it. 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. BBY's gross profit margin is 26.6%. 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. BBY's operating profit margin of 2.3% 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. Net margin is 0.1%.

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. 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. BBY has a capitalization ratio of 31.4%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Gartner (NYSE:IT) is up 4% to reach a current price of $44.79 per share. So far today, 361,391 shares of the company's stock have changed hands. Yesterday, 704,052 shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. 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. IT has a gross profit margin of 58.9%. The operating margin ratio can also be useful for tracking an individual company's performance across time, where an increasing ratio is good and a declining ratio may provide cause for concern that a company's business model is weakening. IT has an operating profit margin of 14.5%. Net profit margins are those generated from all phases of a business, including taxes. The company has a net profit margin of 9.4%.

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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. IT's PEG ratio of 1.45 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

After a decline of 3.9%, Dollar Tree (Nasdaq:DLTR) has hit a share price of $51.70. The company's volume is currently 1.2 million shares for the day, 0.5 times its current three-month 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. 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. DLTR's gross profit margin is 38.3%. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. DLTR's operating profit margin is 10.9%. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. The company's net profit margin is 7.4%.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. DLTR has a P/B ratio of 8.1 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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

Increasing 3.7%, GNC Holdings (NYSE:GNC) is trading at $40.64 per share. So far today, the company's volume is 1.7 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. GNC has a gross profit margin of 39.2%. 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. Relative to its gross profit margin, GNC's operating margin of 18% is on the low side. Net profit margin is calculated by dividing net income by sales. Net profit margin for the company is 8.5%.

Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. GNC has a P/E ratio of 22.7, high compared to the industry average of 18.29. 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. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: The P/E Ratio: A Good Market-Timing Indicator

Tripadvisor (Nasdaq:TRIP) has moved up 3.6% and is currently trading at $46.28 per share. The company's volume is currently 685,770 shares for the day, 0.4 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. PEG ratio for TRIP is consistent with the industry average at 2.29. 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.

Currently trading at $57.59 per share, Lululemon Athletica (Nasdaq:LULU) has fallen 3.4%. The company's volume for the day so far is 1.6 million shares. This is below yesterday's volume of 3.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. The gross profit margin for LULU is 59.2%. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. Operating profit margin for LULU is 25.6%. 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. Net margin is 17.9%.

Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. LULU's stock is trading for more than its book value with a P/B ratio of 12.41. 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 The nature of the market is such that stocks will have good days and bad days. 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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