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Tickers in this Article: WTI, CIE, SPN, VLO, BP, AREX, ESV
The Nasdaq has climbed 0.4%, the S&P 500 has moved little and the Dow has been relatively flat after the morning's trading. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.

The Energy sector (XLE) is up 0.4% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
W&T Offshore, Inc. (NYSE:WTI)$1.22 billion+15.9%
Cobalt International Energy, Inc. (NYSE:CIE)$9.92 billion+12.3%
Superior Energy Services, Inc. (NYSE:SPN)$3.67 billion-9.5%
Valero Energy (NYSE:VLO)$14.42 billion+5.9%
BP (NYSE:BP)$132.14 billion-4%
Approach Resources Inc. (Nasdaq:AREX)$901.5 million+3.2%
ENSCO PLC (NYSE:ESV)$13.01 billion-3%
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W&T Offshore (NYSE:WTI) has soared 15.9% to reach a current price of $19.07 per share. So far today, the company's volume is 938,124 shares, 1.6 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Relative to the industry P/E ratio of 35.68, WTI's 7.9 is low. 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. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio

Cobalt International Energy (NYSE:CIE) is trading at $27.13 per share, a significant rise of 12.3%. The company's volume for the morning is 4.7 million shares. This is 3.5 times the current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CIE has a debt ratio of 11%, 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. 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.

Currently trading at $21.09 per share, Superior Energy Services (NYSE:SPN) has fallen 9.5%. This morning, 2.5 million shares have been traded, more than yesterday's 1.8 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. 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. 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. SPN's D/E ratio is 51%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Valero (NYSE:VLO) has risen 5.9% to hit a current price of $27.62 per share. So far today, 13.1 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. The P/B ratio for VLO is 0.96 because the stock is trading for less than its book value. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio

BP (NYSE:BP) is down 4% to reach $40.15 per share. With 6.1 million shares changing hands so far today, the company's volume is 1.1 times the current three-month average. 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 a 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. 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. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). BP's PEG ratio of 1.38 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.

Rising 3.2%, Approach Resources (Nasdaq:AREX) is currently trading at $27.77 per share. So far this morning, 102,166 shares have changed hands. This is 0.3 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. AREX has a P/E ratio of 106.8, high compared to the industry average of 35.68. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: The P/E Ratio: A Good Market-Timing Indicator

After a decline of 3%, ENSCO (NYSE:ESV) has hit a share price of $54.75. So far today, 5.9 million shares have changed hands, which is likely to result in less activity than yesterday's volume of 59.1 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. ESV's dividend yield is 2.7%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Due Diligence On Dividends

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. 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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