The market is currently up, with the Nasdaq up 0.5%, the S&P 500 rising 0.3% and the Dow climbing 0.5%.
The Services sector (IYC) is up 0.2%, underperforming the market overall. The biggest movers in the sector are currently:
|Company||Market Cap||Percentage Change|
|Ryder System, Inc. (NYSE:R)||$2.09 billion||-13.2%|
|Susser Holdings Corporation (Nasdaq:SUSS)||$689.8 million||+5.4%|
|Tripadvisor Inc (Nasdaq:TRIP)||$5.77 billion||+3.8%|
|Wright Express Corp (NYSE:WXS)||$2.32 billion||-3.3%|
|Carnival plc (ADR) (NYSE:CUK)||$27.25 billion||-3.2%|
|Philippine Long Distance Telephone (ADR) (NYSE:PHI)||$10.52 billion||+3%|
|Carnival (NYSE:CCL)||$28.06 billion||-2.8%|
Ryder System (NYSE:R) is at a share price of $35.39 after a sharp decline of 13.2%. So far today, 2.3 million shares have changed hands, which is more trading activity than there was yesterday. Volume is an important indicator because it indicates how significant a price shift is. Margin ratios highlight companies that are worth further examination. R has a gross profit margin of 32.9%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. R's operating profit margin is 3.1%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. The company's net profit margin is 2.9%.
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. 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. R has a P/B ratio of 1.32 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: How Buybacks Warps The Price-To-Book Ratio
Susser (Nasdaq:SUSS) has increased to a share price of $34.71, a 5.4% rise. So far today, the company's volume is 70,384 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. SUSS has a low gross profit margin of 10.4%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Compared with its gross profit margin, SUSS' operating profit margin of 0.7% and net profit margin of 0.9% are low.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for SUSS is 0.1, which is relatively low. The lower the P/S ratio, the more reasonably price the stock, all else being equal. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Rising 3.8%, Tripadvisor (Nasdaq:TRIP) is currently trading at $44.66 per share. With 808,203 shares changing hands so far today, the company's volume is 0.5 times the 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. 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. The P/E ratio for TRIP is 32.8, above the industry average of 15.29. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?
Slipping 3.3%, Wright (NYSE:WXS) is currently trading at $57.79 per share. The company's volume for the morning is 398,564 shares. This is 1.1 times the current daily average. 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. WXS has a gross profit margin of 84.1%, which is on the high end. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. With a net profit margin of 25.3%, the company has a high one compared to its gross profit margin. A company with a high profit margin has a greater capability to maintain strong earnings during a recession than does a company with a low profit margin, providing investors with a greater margin of safety. 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. Operating profit margin for WXS is 41.4%.
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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. WXS' D/E ratio is 58%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
At $33.89, Carnival plc (NYSE:CUK) has slipped 3.2%. At 225,461 shares, the company's volume so far today is more than yesterday's 222,645 shares. The trading volume for a stock indicates the level of investor interest. 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 CUK is 33.6%. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company has a net profit margin of 10.2%, which is low relative to its gross profit margin. A company with a low or negative net profit margin can potentially increase its profitability by taking steps to reduce costs and increase sales. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. CUK's operating profit margin is 7.4%.
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 measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. CUK's capitalization ratio is 25.2%, which is relatively low. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Philippine Long Distance Telephone (NYSE:PHI) is up 3% to reach a current price of $58.02 per share. This morning, the company is trading a volume of 26,761 shares. The trading volume for a stock indicates the level of investor interest. 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. PHI has a relatively high gross profit margin of 95.8%. This may indicate that the company is over-pricing its products and/or services. Relative to its gross profit margin, PHI's operating profit margin of 29.7% and net profit margin of 18.8% are high.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. The P/B ratio for PHI is 3.94, indicating that the stock is trading for more 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
Carnival (NYSE:CCL) is down 2.8% to reach $33.62 per share. The company's volume for the day so far is 6.6 million share, 1.2 times the average volume over the last three months. 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. 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 CCL is 33.6%. 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. Relative to its gross profit margin, the company has a low net profit margin of 10.2%. This is potentially worrying, as companies with low profit margins are vulnerable to poor market conditions. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. CCL has an operating profit margin of 7.4%.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. CCL's dividend yield is 2.9%. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.