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Tickers in this Article: FTK, DK, ALJ, CNX, WLT, CNQ, GPOR
The market is currently down, with the Nasdaq decreasing 0.1%, the S&P 500 down 0.2% and the Dow slipping 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 up 0.3% on a bad day for the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
Flotek Industries, Inc. (NYSE:FTK)$514.5 million+13.7%
Delek US Holdings, Inc. (NYSE:DK)$1.39 billion+7.9%
Alon USA Energy, Inc. (NYSE:ALJ)$699 million-6.8%
Consol Energy (NYSE:CNX)$7.08 billion+5.2%
Walter Energy, Inc. (NYSE:WLT)$2.31 billion+4.9%
Canadian Natural Resource Ltd (USA) (NYSE:CNQ)$32.7 billion+4.9%
Gulfport Energy Corporation (Nasdaq:GPOR)$1.46 billion+4.7%
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Flotek Industries (NYSE:FTK) is trading at $11.82 per share, a significant rise of 13.7%. This morning, the company is trading a volume of 2.4 million shares. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. FTK's P/B ratio of 6.95 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

Delek US Holdings (NYSE:DK) is up 7.9% to reach a current price of $25.85 per share. With 846,021 shares changing hands so far today, the company's volume is 2.1 times its current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. DK's P/E ratio of 7.5 is under the industry average of 36.49. 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. 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

Alon USA Energy (NYSE:ALJ) is down 6.8% to reach $11.59 per share. So far today, the company's volume is 311,019 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 estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ALJ's P/S ratio of 0.07 is fairly low. 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. 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.

Rising 5.2%, Consol (NYSE:CNX) is currently trading at $32.72 per share. The company's volume is currently 2.3 million shares for the day, consistent with its current daily average. If a stock price moves on high volume, this means that the change is a significant one. A company's investment value can be 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CNX's debt ratio of 69.3% is fairly high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. 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.

Walter Energy (NYSE:WLT) has increased to a share price of $38.85, a 4.9% rise. So far today, the company's volume is 1.5 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 compares the total liabilities for a company to its total shareholder equity. WLT has a high D/E ratio of 103%. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Canadian Natural Resource Ltd (NYSE:CNQ) has moved up 4.9% and is currently trading at $31.27 per share. The company's volume is currently 3.7 million shares for the day, 1.1 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CNQ has a low capitalization ratio of 23.3%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Gulfport (Nasdaq:GPOR) has risen 4.7% to hit a current price of $27.55 per share. So far today, 797,790 shares of the company's stock have changed hands. At this rate, trading activity will likely be down from yesterday when 3.9 million shares changed hands. 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. The P/B ratio for GPOR is 2.36, indicating that the stock is trading for more 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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