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Tickers in this Article: ICLR, CELG, SGNT, VRTX, CYBX, PCYC, PRXL
It's been a bad day for the market after the morning's trading. The Nasdaq has slipped 0.3%; the S&P 500 is down 0.3%; and the Dow is trading down 0.4%. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.

Despite a bad day for the market overall so far, the Healthcare sector (XLV) is up 0.4% and its biggest movers are currently:
CompanyMarket CapPercentage Change
AMERIGROUP Corporation (NYSE:AGP)$3.12 billion+38%
Centene Corp (NYSE:CNC)$1.49 billion+19.3%
WellCare Health Plans, Inc. (NYSE:WCG)$2.28 billion+17.7%
Questcor Pharmaceuticals, Inc. (Nasdaq:QCOR)$3.17 billion+12.9%
Akorn, Inc. (Nasdaq:AKRX)$1.5 billion+5.9%
Optimer Pharmaceuticals, Inc. (Nasdaq:OPTR)$763.2 million-4.4%
Varian Medical Systems (NYSE:VAR)$6.68 billion-3.3%
Forex Broker Summary: Forex Capital Markets (FXCM)

AMERIGROUP (NYSE:AGP) rose a significant 38% to reach $88.80 per share. So far today, 13.6 million 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. Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. AGP has a P/S ratio of 0.49, on the low end. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. 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.

After a big jump of 19.3%, Centene (NYSE:CNC) is trading at $34.51 per share. At 3.1 million shares, the company's volume so far today is which is more trading activity than there was yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. CNC has a debt ratio of 57.1%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

WellCare Health Plans (NYSE:WCG) has soared 17.7% to reach a current price of $62.20 per share. So far today, 2.2 million shares have changed hands. This is 2.1 times its average volume 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalizion ratio of 10% 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. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Questcor Pharmaceuticals (Nasdaq:QCOR) is trading at $56.71 per share, a significant rise of 12.9%. At 3.6 million shares, the company's volume so far today is 2.5 times 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. 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. QCOR's gross profit margin of 94.9% is on the high side. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Net profit margin compares net income with sales. Relative to its gross profit margin, the company has a high net profit margin of 38.6%. Investors in companies with high profit margins can be confident that even if sales dip slightly, profits will remain strong. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. Operating profit margin for QCOR is 59.7%.

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/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). QCOR has a P/E ratio of 31.0. 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

After rising 5.9%, Akorn (Nasdaq:AKRX) is currently trading at a share price of $16.67. The company is currently trading a volume of 1.1 million shares. A stock's volume conveys how excited investors are about it. Margin ratios highlight companies that are worth further examination. AKRX has a gross profit margin of 63.2%. 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. AKRX's operating profit margin is 30.9%. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net profit margin for the company is 28%.

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. PEG ratio for AKRX is 1.31. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Optimer Pharmaceuticals (Nasdaq:OPTR) has decreased to $15.51 per share, a 4.4% fall. This morning, 151,338 shares have been traded, which is less activity than yesterday's volume of 196,274 shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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. OPTR has a high gross profit margin of 92.8%. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. The operating and net profit margins for OPTR are both negative. This is because the company reported net and operating losses in the most recent quarter.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for OPTR is 5.31, indicating that the stock is trading for more 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: Investment Valuation Ratios: Price/Book Value Ratio

Varian (NYSE:VAR) is trading at $57.98 per share, down 3.3%. The company's volume for the day so far is 1.7 million shares. This is 1.7 times the average volume over the last three months. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin analysis is a great way to understand the profitability of companies. VAR has a gross profit margin of 42.2%. The operating margin ratio can also be useful for tracking an individual company's performance across time, where an increasing ratio is good and a declining ratio may provide cause for concern that a company's business model is weakening. Relative to its gross profit margin, VAR's operating margin of 20% is on the low side. 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 14.6%.

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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. VAR has a low debt-equity ratio of 11%. This shows that the company's assets are financed primarily through equity. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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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