The market is having a good day so far: the Nasdaq has climbed 1.4%; the S&P 500 has climbed 1.1%; and the Dow is up 0.8%. 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.

The Technology sector (XLK) is up 1.2%, underperforming the market overall. The biggest movers in the sector are currently:


CompanyMarket CapPercentage Change
Blucora (Nasdaq:BCOR)$510.4 million+26.1%
QLogic Corporation (Nasdaq:QLGC)$1.21 billion-19.4%
Qlik Technologies Inc (Nasdaq:QLIK)$1.51 billion+18.5%
NetSuite Inc. (NYSE:N)$3.47 billion+15.4%
Acme Packet, Inc. (Nasdaq:APKT)$1.11 billion-13.2%
Coherent, Inc. (Nasdaq:COHR)$1.06 billion+10.2%
Advantest Corp. (ADR) (NYSE:ATE)$2.79 billion-9.4%

Software Summary: Finviz.com Stock Screener

Blucora (Nasdaq:BCOR) rose a significant 26.1% to reach $16.08 per share. The company's volume for the day so far is 676,709 shares, 4.6 times its average over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is.
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/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. BCOR has a PEG ratio of 0.78. 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 precipitous drop of 19.4%, QLogic (Nasdaq:QLGC) is now trading at a share price of $10.15. This morning, the company's volume is 4.3 million shares. This is two times its average daily volume. The trading volume for a stock indicates the level of investor interest.
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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. QLGC's P/E ratio of 5.7 is under the industry average of 23.36. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall.
SEE: Investment Valuation Ratios: Price/Earnings Ratio

 

 

Qlik Technologies (Nasdaq:QLIK) is currently at $20.92 per share after a dramatic increase of 18.5%. At 2.8 million shares, the company's volume so far today is. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for QLIK is a high 8.1. 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.

 

NetSuite (NYSE:N) has soared 15.4% to reach a current price of $57.01 per share. So far today, 1.2 million shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price.
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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for N is 53.6%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

 

Shares of Acme Packet (Nasdaq:APKT) are currently trading at $14.05, a steep decline of 13.2%. With 8.1 million shares changing hands so far today, the company's volume is 2.4 times the current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. APKT's stock is trading for more than its book value with a P/B ratio of 1.98. This may be a sign that the company is overvalued. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets.
SEE: Using The Price-To-Book Ratio To Evaluate Companies

 

 

Coherent (Nasdaq:COHR) is trading at $49.41 per share, a significant rise of 10.2%. So far today, the company's volume is 65,385 shares. This is 0.9 times its current daily average. 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.
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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. COHR's PEG ratio is 1.06. 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.

 

At $12.65, Advantest Corp (NYSE:ATE) has slipped 9.4%. So far today, 6,289 shares have changed hands, above yesterday's volume of 5,982 shares. The trading volume for a stock indicates the level of investor interest.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. ATE has a low dividend yield of 1.8%. If you are an income investor, this stock may not be attractive to you. 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

 

 

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. 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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Tickers in this Article: BCOR, QLGC, QLIK, N, APKT, COHR, ATE

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