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Tickers in this Article: FSLR, PANL, NXPI, OVTI, FSL, SPRD, FEIC
Currently, the Nasdaq has fallen 0.5%, the S&P 500 has been relatively flat and the Dow has declined 0.2%.

The Semiconductors sector (XLK) has fallen 0.3% despite little change in the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Cavium Inc (Nasdaq:CAVM)$1.21 billion-4.9%
EZchip Semiconductor Ltd. (Nasdaq:EZCH)$987.2 million-3.4%
Cymer, Inc. (Nasdaq:CYMI)$1.89 billion-3.2%
ARM Holdings plc (ADR) (Nasdaq:ARMH)$10.12 billion+2.8%
Mellanox Technologies, Ltd. (Nasdaq:MLNX)$2.74 billion-2.5%
ASML Holding N.V. (ADR) (Nasdaq:ASML)$22.67 billion-2.3%
M\x2FA-COM Technology Solutions Holdings (Nasdaq:MTSI)$824.9 million-2.3%
Software Summary: Finviz.com Stock Screener

Cavium (Nasdaq:CAVM) is currently trading at a share price of $23.06, a 4.9% decline. At 689,778 shares, the company's volume so far today is 0.7 times its current three-month average. 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. 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. The gross profit margin for CAVM is 56.7%. CAVM's operating and net profit margins are both negative. This is because the company reported net and operating losses in the most recent quarter.

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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CAVM has a debt ratio of 15%, which is fairly low. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

EZchip (Nasdaq:EZCH) has decreased to $34.05 per share, a 3.4% fall. So far today, the company's volume is 107,363 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. EZCH has a gross profit margin of 65.4%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. EZCH has an operating profit margin of 31.5%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. The company's net profit margin is 17.9%.

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 measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. EZCH has a high P/S ratio of 18.84. This could be a good sign if the share price increases. 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 decline of 3.2%, Cymer (Nasdaq:CYMI) has hit a share price of $59.23. The company's volume is currently 89,781 shares for the day, 0.2 times the average daily volume. 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. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for CYMI is 54.7%. 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. Operating profit margin for CYMI is 11.1%. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. Net margin is 12.4%.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. CYMI's P/B ratio of 2.36 shows that its share price is higher 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: How Buybacks Warps The Price-To-Book Ratio

ARM Holdings plc (Nasdaq:ARMH) has risen 2.8% to hit a current price of $22.68 per share. The company's volume for the day so far is 1.9 million shares. Trading activity is down from yesterday when 3.5 million shares changed hands. Volume is used to evaluate how meaningful the price movement of a stock 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. ARMH's gross profit margin of 94.4% is on the high side. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating margin for ARMH is 36.5% and net margin is 25.3%, both high relative to its gross margin.

While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. ARMH's P/E ratio of 52.2 is above the industry average of 12.03. This could mean that the market is expecting big things over the next few months or years. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Investment Valuation Ratios: Price/Earnings Ratio

Mellanox (Nasdaq:MLNX) has fallen 2.5% and is currently trading at $67.30 per share. The company's volume for the day so far is 428,400 share, 0.6 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for MLNX is 72.6%. MLNX's operating margin of 14.9% and net margin of 8.2% are high relative to its gross margin.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). MLNX has a PEG ratio of 5.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Falling 2.3%, ASML Holding N.V (Nasdaq:ASML) is currently at a share price of $51.34. So far today, 1.5 million shares have changed hands. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Margin ratios highlight companies that are worth further examination. ASML has a gross profit margin of 45.8%. Operating margin for ASML is 25.8% and net margin is 24.9%, both low relative to its gross margin.

Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ASML has a debt ratio of 51.2%. 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.

M\x2FA-COM Technology Solutions (Nasdaq:MTSI) is down 2.3% to reach $17.78 per share. At 40,898 shares, the company's volume so far today is consistent with its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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. The gross profit margin for MTSI is 35%. The operating profit margin indicates how much EBIT is generated per dollar of sales. MTSI has a negative operating margin of -0.7%. This shows that the company reported a net operating loss in the most recent quarter. 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. Net profit margin for the company is 1.4%.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. MTSI's P/S ratio of 0.52 is fairly low. 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 keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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