So far today, the Nasdaq is unchanged, the S&P 500 is trading up 0.3% and the Dow is trading up 0.2%. 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) has increased 0.5% so far today and here are its biggest movers:
|Company||Market Cap||Percentage Change|
|Nordson (Nasdaq:NDSN)||$3.54 billion||+12.7%|
|NACCO Industries (NYSE:NC)||$893.2 million||+4.1%|
|Joy Global (NYSE:JOY)||$6.04 billion||+2.4%|
|Esterline (NYSE:ESL)||$1.74 billion||+2.2%|
|Elbit Systems Ltd (Nasdaq:ESLT)||$1.35 billion||-2%|
|SPX (NYSE:SPW)||$3.32 billion||+1.8%|
|Cummins (NYSE:CMI)||$19.56 billion||+1.7%|
Software Summary: Finviz.com Stock Screener
Nordson (Nasdaq:NDSN) has soared 12.7% to reach a current price of $61.96 per share. So far today, 1.2 million shares of the company's stock have changed hands. This is greater than yesterday's volume of 383,163 shares. Volume indicates the level of interest that investors have in a company at its current price. 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/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. NDSN's PEG ratio of 1.63 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.
NACCO Industries (NYSE:NC) has increased to a share price of $110.85, a 4.1% rise. At 5,526 shares, the company's volume so far today is 0.3 times the average daily volume. 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. 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. 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. NC has a D/E ratio of 50%. 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.
Joy Global (NYSE:JOY) is at $58.45 per share after an increase of 2.4%. The company is currently trading a volume of 1.1 million shares. 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 debt ratio shows the proportion of assets that a company is financing through debt. JOY has a debt ratio of 62.6%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. 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.
Esterline (NYSE:ESL) is up 2.2% to reach a current price of $57.85 per share. The company's volume for the day so far is 51,986 shares, 0.3 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). ESL's P/E ratio of 13.7 is consistent with the industry average. 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: How To Find P/E And PEG Ratios
Elbit Systems Ltd (Nasdaq:ESLT) is down 2% to reach $31.06 per share. The company's volume for the day so far is 4,400 shares. This is about the same trading activity as there was yesterday. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. The capitalization ratio for ESLT is 39.8%. 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.
After an increase of 1.8%, SPX (NYSE:SPW) has reached a current price of $66.66. The company's volume is currently 150,644 shares for the day, 0.3 times its current daily average. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. SPW's P/B ratio of 1.56 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio
After rising 1.7%, Cummins (NYSE:CMI) is currently trading at a share price of $104.49. The company's volume for the day so far is 931,068 shares. 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. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. The dividend yield for CMI is 1.9%, which is on the low end. If you are an income investor, this stock may not be attractive to you. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Investment Valuation Ratios: Dividend Yield
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.