The market is having a bad day so far: the Nasdaq has fallen 0.9%; the S&P 500 is trading down 0.7%; and the Dow has declined 0.7%.
The Semiconductors sector (XLK) is down 0.8%, outperforming the market overall. Currently, the biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|First Solar (Nasdaq:FSLR)||$2.1 billion||-11.4%|
|Coherent (Nasdaq:COHR)||$1.13 billion||-3%|
|Silicon (Nasdaq:SLAB)||$1.62 billion||-2.3%|
|Veeco Instruments (Nasdaq:VECO)||$1.37 billion||-2.3%|
|KLA-Tencor (Nasdaq:KLAC)||$8.7 billion||-2%|
|Cymer (Nasdaq:CYMI)||$1.76 billion||-1.7%|
|Broadcom (Nasdaq:BRCM)||$19.93 billion||-1.7%|
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First Solar (Nasdaq:FSLR) is at a share price of $21.43 after a sharp decline of 11.4%. The company is currently trading a volume of 8.8 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. FSLR's P/B ratio of 0.55 indicates that its share price is lower than its book value. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. 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
Coherent (Nasdaq:COHR) is trading at $46.16 per share, down 3%. The company's volume for the day so far is 12,592 shares, 0.3 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). The P/E ratio for COHR is 14.3, below the industry average of 32.05. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: The P/E Ratio: A Good Market-Timing Indicator
Silicon (Nasdaq:SLAB) has fallen 2.3% and is currently trading at $38 per share. So far today, the company's volume is 67,689 shares. This is on pace to fall short of yesterday's volume of 328,013 shares. 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. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for SLAB is 3.13, which is relatively high. This could be a good sign if the share price increases. 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.
Veeco Instruments (Nasdaq:VECO) is currently trading at a share price of $34.26, a 2.3% decline. So far today, the company's volume is 175,917 shares, 0.2 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for VECO is a low 16.1%. 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.
Falling 2%, KLA-Tencor (Nasdaq:KLAC) is currently at a share price of $51.20. So far today, the company's volume is 727,464 shares. The trading volume for a stock indicates the level of investor interest. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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. The debt-equity ratio of 23% is relatively low. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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.
At $55.77, Cymer (Nasdaq:CYMI) has slipped 1.7%. So far today, the company's volume is 61,399 shares, 0.2 times its average over the past three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. CYMI's PEG ratio of 3.28 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.
Slipping 1.7%, Broadcom (Nasdaq:BRCM) is currently trading at $35.06 per share. So far today, 1.1 million shares of the company's stock have changed hands. This is on pace to fall short of yesterday's volume of five million shares. 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. BRCM's P/B ratio of 2.75 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.