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Tickers in this Article: VMC, BECN, TKR, MLM, AWI, SLCA, HXM
The market is currently down, with the Nasdaq declining 0.2%, the S&P 500 falling 0.2% and the Dow slipping 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) is down 0.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Vulcan Materials (NYSE:VMC)$6.36 billion-8.2%
Beacon Roofing Supply (Nasdaq:BECN)$1.43 billion-4.8%
Timken (NYSE:TKR)$4.12 billion-3.4%
Martin Marietta Materials (NYSE:MLM)$4.17 billion-3%
Armstrong World Industries (NYSE:AWI)$2.78 billion-2.9%
US Silica Holdings (NYSE:SLCA)$773.7 million+2.5%
Homex Development Corp (NYSE:HXM)$762.9 million+2.2%
Broker Summary: E-Trade Financial

Currently trading at $45.14 per share, Vulcan Materials (NYSE:VMC) has fallen 8.2%. So far today, the company's volume is 537,506 shares, in keeping with its current daily average. 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. 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for VMC is a high 1.97. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Falling 4.8%, Beacon Roofing Supply (Nasdaq:BECN) is currently at a share price of $28.94. So far today, the company's volume is 362,561 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for BECN is 18.1, above the industry average of 16.92. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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

Timken (NYSE:TKR) is down 3.4% to reach $40.89 per share. The company's volume is currently 255,596 shares for the day, 0.3 times the current three-month average. Volume is an important indicator because it indicates how significant a price shift is. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. TKR's PEG ratio of 0.72 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.

Martin Marietta Materials (NYSE:MLM) has decreased to $88.18 per share, a 3% fall. The company's volume is currently 71,530 shares. At this rate, trading activity will likely be down from yesterday when 1.1 million shares changed hands. 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. 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 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. MLM's stock is trading for more than its book value with a P/B ratio of 2.93. 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. 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

Armstrong World Industries (NYSE:AWI) has fallen 2.9% and is currently trading at $45.91 per share. So far today, the company's volume is 65,310 shares, 0.3 times the 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for AWI is 75.2%, which is relatively 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

US Silica Holdings (NYSE:SLCA) has risen 2.5% to hit a current price of $14.99 per share. The company's volume for the day so far is 84,576 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt-equity (D/E) ratio is a leverage ratio. SLCA's D/E ratio of 121% is on the high side. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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.

Homex Development Corp (NYSE:HXM) has increased to a share price of $13.97, a 2.2% rise. At 123,177 shares, the company's volume so far today is 0.3 times its current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. 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. HXM has a high capitalization ratio of 50.6%. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. 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 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. 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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