Filed Under: ,
Tickers in this Article: HK, TOO, COG, HEP, RRMS, TSO, IOC
The market is having a good day so far: the Nasdaq has increased 0.1%; the S&P 500 has climbed 0.3%; and the Dow is up 0.4%. 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 0.8%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Halcon (NYSE:HK)$1.81 billion-8.2%
Teekay Offshore Partners (NYSE:TOO)$2.03 billion-4.9%
Cabot Oil & Gas (NYSE:COG)$9.35 billion+3.4%
Holly Energy Partners (NYSE:HEP)$2.06 billion-2.8%
Rose Rock (NYSE:RRMS)$526.9 million-2.8%
Tesoro (NYSE:TSO)$5.64 billion+2.8%
InterOil Corporation (NYSE:IOC)$3.84 billion+2.4%
Broker Summary: TD Ameritrade Thinkorswim

Halcon (NYSE:HK) is currently trading at a share price of $7.85, a 8.2% decline. The company is trading at a volume of 3.5 million shares. This is greater than yesterday's volume of 2.1 million shares. 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. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. HK has a debt-equity ratio of 36%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Slipping 4.9%, Teekay Offshore Partners (NYSE:TOO) is currently trading at $27.35 per share. At 4.1 million shares, the company's volume so far today is 49.3 times the current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 TOO is a high 2.02. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.

Cabot Oil & Gas (NYSE:COG) has moved up 3.4% and is currently trading at $46.03 per share. This morning, the company is trading a volume of 1.6 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. COG has a low dividend yield of 0.2%. A company with a low dividend yield may be a safer investment in the long run. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Guide To Stock-Picking Strategies: Income Investing

After a decline of 2.8%, Holly Energy Partners (NYSE:HEP) has hit a share price of $70.59. The company's volume is currently 42,724 shares for the day, 0.8 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). HEP's P/E ratio of 26.9 is under the industry average of 34.14. A low P/E ratio may indicate that the market expects relatively slower earnings growth. 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?

Rose Rock (NYSE:RRMS) is down 2.8% to reach $30.51 per share. The company's volume for the day so far is 3,401 shares. This is a sign that there will be less trading activity than there was yesterday. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular 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. RRMS has a low debt ratio of 32.9%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Tesoro (NYSE:TSO) has risen 2.8% to hit a current price of $41.43 per share. With 1.4 million shares changing hands so far today, the company's volume is in keeping with its current three-month average. The trading volume for a stock indicates the level of investor interest. 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 price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. TSO has a P/B ratio of 1.41 which shows that its share price is higher 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. 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

Increasing 2.4%, InterOil Corporation (NYSE:IOC) is trading at $81.40 per share. The company is currently trading a volume of 182,487 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. IOC has a low capitalization ratio of 10.7%. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.

comments powered by Disqus

Trading Center