So far today, the Nasdaq has fallen 0.8%, the S&P 500 is down 0.2% and the Dow is trading up 0.4%.
The Semiconductors sector (XLK) is up 0.5% so far today and here are its biggest movers:
|Company||Market Cap||Percentage Change|
|InvenSense Inc (NYSE:INVN)||$747.8 million||+26.2%|
|RF Micro Devices, Inc. (Nasdaq:RFMD)||$1.18 billion||-14.8%|
|Altera (Nasdaq:ALTR)||$9.9 billion||+14.3%|
|Silicon Laboratories (Nasdaq:SLAB)||$1.5 billion||+10.2%|
|Broadcom (Nasdaq:BRCM)||$16.95 billion||+9.8%|
|ARM Holdings plc (ADR) (Nasdaq:ARMH)||$10.25 billion||+9%|
|Cavium Inc (Nasdaq:CAVM)||$1.2 billion||+5.8%|
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InvenSense (NYSE:INVN) has soared 26.2% to reach a current price of $11.60 per share. The company's volume for the day so far is 3.2 million shares, 3.8 times the average volume over the last 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 estimating whether a stock price is too high, reasonable or a bargain investment opportunity. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for INVN is 9.48, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
After a precipitous drop of 14.8%, RF Micro Devices (Nasdaq:RFMD) is now trading at a share price of $3.65. So far today, the company's volume is 12.6 million shares. Yesterday's volume was only 5.2 million shares. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. RFMD has a P/B ratio of 1.51 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Altera (Nasdaq:ALTR) is currently at $35.05 per share after a dramatic increase of 14.3%. The company's volume is currently 8.4 million shares for the day, 2.1 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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. ALTR's P/E ratio of 15.2 falls below the industry average of 18.0. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: Can Investors Trust the P/E Ratio?
Silicon (Nasdaq:SLAB) rose a significant 10.2% to reach $38.50 per share. The company is currently trading a volume of 714,220 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). SLAB's PEG ratio of 1.66 is in line with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Broadcom (Nasdaq:BRCM) has moved up 9.8% and is currently trading at $33.79 per share. At 10.1 million shares, the company's volume so far today is one times the current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. BRCM has a low debt ratio of 28.1%. A low debt ratio means the company has more available cash flow. 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.
Rising 9%, ARM Holdings plc (Nasdaq:ARMH) is currently trading at $24.35 per share. The company's volume is currently 2.9 million shares. Yesterday, volume was only two million shares. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for ARMH is 0.8%, which is on the low end. A company with a low dividend yield may be a safer investment in the long run. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Guide To Stock-Picking Strategies: Income Investing
After rising 5.8%, Cavium (Nasdaq:CAVM) is currently trading at a share price of $25.60. The company's volume is currently 414,411 shares for the day, 0.3 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. CAVM's P/S ratio of 6.16 is on the high side. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.