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Tickers in this Article: IOC, LUFK, FTI, CAM, CXO, OIS, CLR
The market is currently down, with the Nasdaq slipping 1%, the S&P 500 declining 0.5% and the Dow down 0.2%. 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 down 1.1%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
InterOil Corporation (NYSE:IOC)$3.75 billion-4.3%
Lufkin Industries (Nasdaq:LUFK)$1.91 billion-3.8%
FMC (NYSE:FTI)$11.49 billion-3.6%
Cameron International (NYSE:CAM)$13.9 billion-3%
Concho Resources (NYSE:CXO)$10.04 billion-2.7%
Oil States International (NYSE:OIS)$4.4 billion-2.6%
Continental Resources (NYSE:CLR)$13.72 billion-2.5%
Forex Broker Summary: Forex Capital Markets (FXCM)

InterOil Corporation (NYSE:IOC) is trading at $74.20 per share, down 4.3%. This morning, 324,118 shares have been traded, consistent with the volume from yesterday which is likely to result in less activity than yesterday's volume of 711,918 shares. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. IOC's debt-equity ratio of 15% is on the low end. This shows that the company's assets are financed primarily through equity. 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.

Lufkin Industries (Nasdaq:LUFK) is currently trading at a share price of $54.61, a 3.8% decline. So far today, the company's volume is 297,047 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. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. LUFK's P/B ratio of 2.42 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio

After a decline of 3.6%, FMC (NYSE:FTI) has hit a share price of $46.48. The company's volume for the day so far is 1.1 million shares, 0.7 times its average over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. FTI's P/S ratio of 1.65 is on the high side. 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.

Cameron International (NYSE:CAM) has decreased to $54.74 per share, a 3% fall. So far today, the company's volume is 803,014 shares. This is 0.3 times the average daily volume. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CAM's debt ratio is 50.1%. 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.

Concho Resources (NYSE:CXO) is trading at $93.43 per share, down 2.7%. At 459,989 shares, the company's volume so far today is on pace to reach yesterday's volume of one million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CXO's capitalization ratio is 42.9%. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

Oil States International (NYSE:OIS) is trading at $78.25 per share, down 2.6%. So far today, 217,497 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. OIS' P/E ratio of 10.5 is under the industry average of 14.78. 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. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Profit With The Power Of Price-To-Earnings

Falling 2.5%, Continental Resources (NYSE:CLR) is currently at a share price of $73.80. So far today, the company's volume is 410,313 shares, in keeping with the average volume over the past three months. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. CLR's D/E ratio is 81%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. 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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