The Nasdaq has moved up 1.4%, the S&P 500 has moved up 1.1% and the Dow has risen 0.8%, marking a bad morning for the market. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
The Utilities sector (XLU) is up 0.9%, underperforming the market overall. The biggest movers in the sector are currently:
|Company||Market Cap||Percentage Change|
|Enersis S.A. (ADR) (NYSE:ENI)||$10.96 billion||-5.6%|
|Copano Energy, L.L.C. (Nasdaq:CPNO)||$2.13 billion||-5.2%|
|Oneok (NYSE:OKE)||$9.06 billion||+2.9%|
|DTE Energy (NYSE:DTE)||$10.23 billion||+2.5%|
|Empresa Nacional de Electricidad (ADR) (NYSE:EOC)||$13.77 billion||-2%|
|American States Water Co (NYSE:AWR)||$753.4 million||+1.9%|
|Companhia de Saneamento Basico (ADR) (NYSE:SBS)||$9.3 billion||+1.8%|
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Enersis S.A (NYSE:ENI) has decreased to $15.84 per share, a 5.6% fall. So far today, 934,737 shares have changed hands. 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. 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 simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for ENI is 16.1, above the industry average of 12.91. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Slipping 5.2%, Copano Energy (Nasdaq:CPNO) is currently trading at $27.94 per share. The company's volume is currently 164,834 shares for the day, 0.6 times its current three-month average. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. CPNO's stock is trading for more than its book value with a P/B ratio of 3.42. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Oneok (NYSE:OKE) has risen 2.9% and is currently trading at $44.88 per share. So far today, 853,839 shares of the company's stock have changed hands. This is greater than yesterday's volume of 835,707 shares. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. OKE has a dividend yield of 3%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Investment Valuation Ratios: Dividend Yield
Rising 2.5%, DTE Energy (NYSE:DTE) is currently trading at $61.60 per share. The company's volume is currently 322,720 shares for the day, consistent with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. DTE has a high P/S ratio of 1.07. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Empresa Nacional de Electricidad (NYSE:EOC) is trading at $49.38 per share, down 2%. The company is currently trading a volume of 88,450 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for EOC is 59.6%. 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.
American States (NYSE:AWR) has risen 1.9% to hit a current price of $40.70 per share. At 15,436 shares, the company's volume so far today is 0.2 times its average over the past three months. 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. 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The D/E ratio for AWR is 82%. 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.
Increasing 1.8%, Companhia de Saneamento Basico (NYSE:SBS) is trading at $83.08 per share. The company's volume is currently 85,279 shares. At this rate, trading activity will likely be down from yesterday when 353,712 shares changed hands. 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 a 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. SBS has a capitalization ratio of 39.8%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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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