The Nasdaq has slipped 0.5%, the S&P 500 has fallen 0.2% and the Dow has increased 0.1% so far today. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.
These are the biggest movers in the Consumer Cyclical sector (XLY) (unchanged):
|Company||Market Cap||Percentage Change|
|Helen of Troy Limited (Nasdaq:HELE)||$1.08 billion||-10.3%|
|Wolverine World Wide, Inc. (NYSE:WWW)||$1.87 billion||+5.5%|
|Harley-Davidson (NYSE:HOG)||$10.58 billion||+3.3%|
|VF (NYSE:VFC)||$14.68 billion||+3.1%|
|Navistar International Corporation (NYSE:NAV)||$1.62 billion||-2.5%|
|Toyota Motor Corporation (ADR) (NYSE:TM)||$124.39 billion||-1.9%|
|TRW Automotive Holdings Corp. (NYSE:TRW)||$4.5 billion||-1.8%|
Forex Broker Summary: UFXMarkets
Helen of (Nasdaq:HELE) is currently trading at $30.52 per share, after a steep drop of 10.3%. The company is currently trading a volume of 245,795 shares. 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. Margin analysis is a great way to understand the profitability of companies. HELE has a gross profit margin of 43%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. HELE has an operating profit margin of 12.4%. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. The company's net profit margin is 9.3%.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. HELE has a P/B ratio of 1.22 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
Wolverine World Wide (NYSE:WWW) has increased to a share price of $40.45, a 5.5% rise. The company's volume is currently 1.8 million shares for the day, 2.4 times the current daily average. The trading volume for a stock indicates the level of investor interest. 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. WWW's gross profit margin is 40.5%. A company's operating margin is calculated by dividing operating income by revenues. Operating profit margin for WWW is 11.4%. Net profit margin is a good ratio for determining how a company is performing. Net margin is 8.5%.
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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. WWW's dividend yield of 1.3% is fairly low. This may indicate that the company's stock is overpriced. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Dividend Yield For The Downturn
Harley-Davidson (NYSE:HOG) has moved up 3.3% and is currently trading at $47.21 per share. The company's volume is currently 1.3 million shares. Yesterday's volume was only 1.1 million shares. 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. HOG has a gross profit margin of 40.1%. 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). The operating margin for HOG is 16.3%, which is low compared its gross profit margin. 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. Net profit margin for the company is 12.2%.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. HOG's P/S ratio of 2.11 is on the high side. 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.
VF (NYSE:VFC) is up 3.1% to reach a current price of $138.21 per share. The company's volume for the day so far is 703,969 share, 0.5 times the current three-month average. 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. VFC's gross profit margin is 47.5%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. VFC has an operating profit margin of 12.3%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company's net profit margin is 9%.
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. VFC has a debt ratio of 53.1%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Navistar (NYSE:NAV) is trading at $23.08 per share, down 2.5%. The company's volume for the day so far is 1.5 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. NAV has a low gross profit margin of 18.4%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. NAV's operating profit margin is -6.9%. This shows that the company reported a net operating loss in the most recent quarter. Net profit margin is calculated by dividing net income by sales. The company has a net profit margin of 9.4%, which is low relative to its gross profit margin. A low net profit margin may be a sign of a price war that is lowering profits.
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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. NAV has a high capitalization ratio of 118%. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
Falling 1.9%, Toyota Motor Corporation (NYSE:TM) is currently at a share price of $77.82. So far today, the company's volume is 116,777 shares, 0.3 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. TM's P/E ratio of 36.6 is above the industry average of 10.06. 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. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
After a decline of 1.8%, TRW Automotive (NYSE:TRW) has hit a share price of $35.98. So far today, 219,505 shares of the company's stock have changed hands. This is below yesterday's volume of 593,036 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. TRW has a low gross profit margin of 13.8%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Compared with its gross profit margin, TRW's operating profit margin of 7.9% and net profit margin of 6.6% are low.
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. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. TRW has a PEG ratio of 0.76, 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.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.