The market is on the rise this morning. The Nasdaq has climbed 2.2%; the S&P 500 has moved up 2%; and the Dow has risen 1.8%. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.
Outperforming the market overall, the Capital Goods sector (XLI) is up 2.3% and its biggest movers so far today are:
|Company||Market Cap||Percentage Change|
|Thor Industries, Inc. (NYSE:THO)||$1.44 billion||+10%|
|Sauer-Danfoss Inc. (NYSE:SHS)||$1.65 billion||+8.5%|
|Granite Construction Inc. (NYSE:GVA)||$956.1 million||-7.9%|
|NACCO Industries, Inc. (NYSE:NC)||$833 million||+6.8%|
|Fluor (NYSE:FLR)||$8.37 billion||+5.7%|
|SPX Corporation (NYSE:SPW)||$2.99 billion||+5.4%|
|Chart Industries, Inc. (Nasdaq:GTLS)||$1.88 billion||+4.4%|
Forex Broker Summary: UFXMarkets
Rising 10%, Thor Industries (NYSE:THO) is currently trading at $29.93 per share. So far today, the company's volume is 430,382 shares, 1.4 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. 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 price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. THO has a PEG ratio of 1.1, which is consistent 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 an increase of 8.5%, Sauer-Danfoss (NYSE:SHS) has reached a current price of $36.85. So far today, 27,764 shares have changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. The P/B ratio for SHS is 3.22, indicating that the stock is trading for more 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 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
Granite Construction (NYSE:GVA) has fallen 7.9% and is currently trading at $22.78 per share. So far today, the company's volume is 561,435 shares, 2.3 times the current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. GVA's dividend yield is 2.1%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Investment Valuation Ratios: Dividend Yield
Increasing 6.8%, NACCO Industries (NYSE:NC) is trading at $106.02 per share. The company is trading at a volume of 18,779 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for NC is 6.8, below the industry average of 22.3. 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: How To Find P/E And PEG Ratios
Fluor (NYSE:FLR) is currently trading at $52.54 per share, a 5.7% increase. The company's volume is currently 1.1 million shares for the day, 0.7 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. FLR has a debt ratio of 58.4%. 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.
SPX (NYSE:SPW) is currently trading at $62.13 per share, a 5.4% increase. The company's volume for the day so far is 238,008 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. SPW has a low P/S ratio of 0.62. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Chart Industries (Nasdaq:GTLS) has risen 4.4% to hit a current price of $65.48 per share. With 257,479 shares changing hands so far today, the company's volume is in keeping with the average volume over the past three months. 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. 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. 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 26.1% is on the low end. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
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.