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Tickers in this Article: PCS, TSCO, ESI, STRA, CAB, FORR, MCO
The market is having a good day so far: the Nasdaq is up 1.1%; the S&P 500 is trading up 1.3%; and the Dow has increased 1.4%.

The Services sector (IYC) is up 0.9%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
MetroPCS Communications Inc (NYSE:PCS)$2.28 billion+36.5%
Tractor Supply Company (Nasdaq:TSCO)$5.7 billion+15.9%
ITT Educational Services, Inc. (NYSE:ESI)$1.22 billion-15.1%
Strayer Education Inc (Nasdaq:STRA)$1.08 billion-15.1%
Cabelas Inc (NYSE:CAB)$2.76 billion+13.6%
Forrester Research, Inc. (Nasdaq:FORR)$691 million-10.8%
Moody\'s (NYSE:MCO)$8.1 billion+10.2%
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After a big jump of 36.5%, MetroPCS Communications (NYSE:PCS) is trading at $8.57 per share. This morning, the company is trading a volume of 11.3 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. A price/sales ratio is derived by dividing stock market price by company sales. PCS has a P/S ratio of 0.66, 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. 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.

Tractor Supply (Nasdaq:TSCO) rose a significant 15.9% to reach $91.64 per share. The company's volume is currently 2.7 million shares for the day, 2.1 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. TSCO has a debt ratio of 39.5%, which is fairly low. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Shares of ITT Educational Services (NYSE:ESI) are currently trading at $42.80, a steep decline of 15.1%. The company's volume for the day so far is 905,446 shares. Yesterday's volume was only 749,537 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. 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. ESI has a high capitalization ratio of 65.6%. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Strayer Education (Nasdaq:STRA) is currently trading at $77 per share, after a steep drop of 15.1%. The company's volume is currently 965,796 shares for the day, 5.1 times its average over the past three months. 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. STRA has a high D/E ratio of 165%. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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.

Cabelas (NYSE:CAB) is currently at $44.55 per share after a dramatic increase of 13.6%. So far today, the company's volume is 1.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. CAB's P/E ratio of 18.2 is above the industry average of 10.21. This could mean that the market is expecting big things over the next few months or years. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

Taking a 10.8% hit, Forrester Research (Nasdaq:FORR) is currently trading at $27.27 per share. At 452,552 shares, the company's volume so far today is 10.8 times the current daily average. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. PEG ratio for FORR is consistent with the industry average at 2.02. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Moody's (NYSE:MCO) is trading at $39.72 per share, a significant rise of 10.2%. So far today, two million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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 MCO is 107.35, 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. 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: How Buybacks Warps The Price-To-Book Ratio

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.

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