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Capital Goods Sector's Biggest Movers for June 22, 2012
The Nasdaq is up 0.5%, the S&P 500 has increased 0.3% and the Dow has climbed 0.5%, marking a bad morning for the market. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.
The Capital Goods sector (XLI) is down 0.2% on a good day for the market overall. The biggest movers in the sector so far are:
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ITT (NYSE:ITT) has fallen 5.3% and is currently trading at $17.71 per share. At 901,592 shares, the company's volume so far today is whereas yesterday, volume was only 860,808 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 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. ITT has a low gross profit margin of -78.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. ITT's operating profit margin of 6.4% is low relative to its gross profit margin.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. ITT has a high debt ratio of 80.7%. 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.
Increasing 3.6%, Sodastream (Nasdaq:SODA) is trading at $38.48 per share. So far today, 346,451 shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for SODA is 56.5%. The operating profit margin is a rough measure of the operating leverage a company can achieve in the conduct of the operational part of its business. SODA's operating profit margin is 13.1%. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company's net profit margin is 10.2%.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. SODA has a low debt-equity ratio of 1%. 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Titan Machinery (Nasdaq:TITN) is currently trading at $27.27 per share, a 3.3% increase. At 91,182 shares, the company's volume so far today is 0.2 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. TITN has a low gross profit margin of 17.6%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin for TITN is 3.7% and net margin is 2.5%, both low relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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). TITN's PEG ratio of 0.66 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.
Colfax (NYSE:CFX) is down 2.8% to reach $27.86 per share. So far today, the company's volume is 467,621 shares. This is 0.6 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. CFX has a gross profit margin of 36.7%. Both CFX's operating and net profit margins are negative. This is because the company reported a net loss and net operating loss in the most recent quarter.
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 company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. CFX's capitalization ratio is 46.3%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Standex (NYSE:SXI) is up 2.4% to reach a current price of $40.71 per share. This morning, 3,574 shares have been traded, below yesterday's volume of 49,258 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. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. SXI's gross profit margin is 34.1%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Relative to its gross profit margin, SXI's operating margin of 10.3% is on the low side. Net profit margins are those generated from all phases of a business, including taxes. The company has a net profit margin of 4.2%.
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. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. SXI has a P/B ratio of 2.0 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
Meritage (NYSE:MTH) has moved up 2.2% and is currently trading at $29.50 per share. The company's volume for the day so far is 198,759 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. MTH has a low gross profit margin of 16.4%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. MTH's operating margin of 0.8% and net margin of -2.2% are low relative to its gross margin.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. MTH has a P/S ratio of 1.0. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Slipping 2.2%, Tenaris S.A (NYSE:TS) is currently trading at $32.75 per share. The company's volume is currently 803,636 shares for the day, 0.5 times the average volume over the last three months. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. TS has a gross profit margin of 40.2%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. The operating margin for TS is 21.6%, which is low compared its gross profit margin. Net profit margin is calculated by dividing net income by sales. Net margin is 15.1%.
A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The debt ratio shows the proportion of assets that a company is financing through debt. TS has a debt ratio of 30.6%, which is fairly low. 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.
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Capital Goods sector (XLI) is down 0.2% on a good day for the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| ITT (NYSE:ITT) | $1.73 billion | -5.3% |
| Sodastream International Limited (Nasdaq:SODA) | $748.3 million | +3.6% |
| Titan Machinery Inc. (Nasdaq:TITN) | $552.8 million | +3.3% |
| Colfax Corporation (NYSE:CFX) | $2.69 billion | -2.8% |
| Standex Int\x27l Corp. (NYSE:SXI) | $501.7 million | +2.4% |
| Meritage Homes Corporation (NYSE:MTH) | $945.1 million | +2.2% |
| Tenaris S.A. (ADR) (NYSE:TS) | $19.76 billion | -2.2% |
ITT (NYSE:ITT) has fallen 5.3% and is currently trading at $17.71 per share. At 901,592 shares, the company's volume so far today is whereas yesterday, volume was only 860,808 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 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. ITT has a low gross profit margin of -78.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. ITT's operating profit margin of 6.4% is low relative to its gross profit margin.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. ITT has a high debt ratio of 80.7%. 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.
Increasing 3.6%, Sodastream (Nasdaq:SODA) is trading at $38.48 per share. So far today, 346,451 shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for SODA is 56.5%. The operating profit margin is a rough measure of the operating leverage a company can achieve in the conduct of the operational part of its business. SODA's operating profit margin is 13.1%. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. The company's net profit margin is 10.2%.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. SODA has a low debt-equity ratio of 1%. 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Titan Machinery (Nasdaq:TITN) is currently trading at $27.27 per share, a 3.3% increase. At 91,182 shares, the company's volume so far today is 0.2 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. TITN has a low gross profit margin of 17.6%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin for TITN is 3.7% and net margin is 2.5%, both low relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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). TITN's PEG ratio of 0.66 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.
Colfax (NYSE:CFX) is down 2.8% to reach $27.86 per share. So far today, the company's volume is 467,621 shares. This is 0.6 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. CFX has a gross profit margin of 36.7%. Both CFX's operating and net profit margins are negative. This is because the company reported a net loss and net operating loss in the most recent quarter.
Standex (NYSE:SXI) is up 2.4% to reach a current price of $40.71 per share. This morning, 3,574 shares have been traded, below yesterday's volume of 49,258 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. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. SXI's gross profit margin is 34.1%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Relative to its gross profit margin, SXI's operating margin of 10.3% is on the low side. Net profit margins are those generated from all phases of a business, including taxes. The company has a net profit margin of 4.2%.
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. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. SXI has a P/B ratio of 2.0 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
Meritage (NYSE:MTH) has moved up 2.2% and is currently trading at $29.50 per share. The company's volume for the day so far is 198,759 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. MTH has a low gross profit margin of 16.4%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. MTH's operating margin of 0.8% and net margin of -2.2% are low relative to its gross margin.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. MTH has a P/S ratio of 1.0. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Slipping 2.2%, Tenaris S.A (NYSE:TS) is currently trading at $32.75 per share. The company's volume is currently 803,636 shares for the day, 0.5 times the average volume over the last three months. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. TS has a gross profit margin of 40.2%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. The operating margin for TS is 21.6%, which is low compared its gross profit margin. Net profit margin is calculated by dividing net income by sales. Net margin is 15.1%.
A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The debt ratio shows the proportion of assets that a company is financing through debt. TS has a debt ratio of 30.6%, which is fairly low. 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.
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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