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Tickers in this Article: PANL, THR, ILMN, PRLB, MR, MSTR, SPRD
The market is doing well so far today. The Nasdaq is up 0.5%; the S&P 500 is up 0.3%; and the Dow has climbed 0.5%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

Outperforming the market overall, the Technology sector (XLK) is up 0.5% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Universal Display Corporation (Nasdaq:PANL).44 billion+5.8%
Thermon Group Holdings Inc (NYSE:THR)8.3 million-4.6%
Illumina, Inc. (Nasdaq:ILMN).76 billion+4.5%
Proto Labs Inc (NYSE:PRLB)8.8 million-4.4%
Mindray Medical International Ltd (ADR) (NYSE:MR).67 billion-4.2%
MicroStrategy Incorporated (Nasdaq:MSTR).35 billion+3.6%
Spreadtrum Communications, Inc (ADR) (Nasdaq:SPRD)1.4 million-3.5%
Forex Broker Summary: UFXMarkets

Universal (Nasdaq:PANL) is currently trading at $32.91 per share, a 5.8% increase. The company's volume is currently 521,154 shares for the day, 0.7 times its average over the past three months. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. PANL has a relatively high gross profit margin of 85.7%. This may indicate that the company is over-pricing its products and/or services. A company's operating margin is calculated by dividing operating income by revenues. PANL has a negative operating margin of -12.3%. This is because the company reported a net operating loss in the most recent quarter. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. The company's net margin of 21.5% is high relative 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.

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 provides a way of evaluating whether a stock is relatively cheap or expensive. PANL has a P/B ratio of 4.5 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Thermon Group Holdings (NYSE:THR) is currently trading at a share price of $19.44, a 4.6% decline. The company is currently trading a volume of 81,222 shares. Volume is an important indicator because it indicates how significant a price shift is. 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 THR is 51.3%. 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. THR's operating profit margin is 21.7%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. Net margin is 4.4%.

Valuation ratios allow the investor to make a quick determination as to a company's investment value. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. THR's P/E ratio of 54.1 is above the industry average of 17.81. 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. 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: Profit With The Power Of Price-To-Earnings

Rising 4.5%, Illumina (Nasdaq:ILMN) is currently trading at $40.65 per share. The company's volume is currently 435,373 shares for the day, 0.3 times the average daily volume. 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. ILMN's gross profit margin is 67.1%. 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 8.5%, the company has a high one compared to its gross profit margin. Companies with high net profit margins have a bigger cushion to protect themselves during the hard times. 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. Operating profit margin for ILMN is 18.2%.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ILMN has a debt ratio of 49.6%, which is fairly low. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Slipping 4.4%, Proto Labs (NYSE:PRLB) is currently trading at $33.94 per share. The company's volume is currently 191,785 shares. Trading activity is down from yesterday when 350,112 shares changed hands. Volume is used to evaluate how meaningful the price movement of a stock is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt-equity (D/E) ratio is a leverage ratio. PRLB has a low debt-equity ratio of 1%. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Mindray Medical International Ltd (NYSE:MR) has fallen 4.2% and is currently trading at $30.54 per share. With 719,702 shares changing hands so far today, the company's volume is 1.6 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. The gross profit margin for MR is 58.9%. Operating profit gives investors an opportunity to do profit-margin comparisons between companies that do not issue a separate disclosure of their cost of goods sold figures (which are needed to do gross margin analysis). MR's operating profit margin is 16.8%. 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. The company has a net profit margin of 18%.

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. 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. The capitalizion ratio of 6.9% is on the low end. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

MicroStrategy (Nasdaq:MSTR) has moved up 3.6% and is currently trading at $129.07 per share. This morning, the company is trading a volume of 30,185 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. MSTR's gross profit margin of 78.4% is on the high side. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. MSTR has an operating profit margin of 0.3% and a net profit margin of 2.9%, both high compared to its gross profit margin.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. MSTR has a high P/S ratio of 2.59. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.

Spreadtrum Communications, Inc (Nasdaq:SPRD) has decreased to $16.82 per share, a 3.5% fall. The company's volume is currently 616,265 shares for the day, 0.7 times the average daily volume. 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. 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. SPRD has a gross profit margin of 40.7%. Relative to its gross profit margin, SPRD's operating profit margin of 16.1% and net profit margin of 18.8% are low.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. PEG ratio for SPRD is consistent with the industry average at 0.27. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. 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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