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Tickers in this Article: TEX, JOY, CNH, MLM, CAT, FLR, CMI
The Nasdaq has declined 0.2%, the S&P 500 is trading up 0.3% and the Dow is unchanged so far today. 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.

These are the biggest movers in the Capital Goods sector (XLI) (+0.8%):
CompanyMarket CapPercentage Change
Terex (NYSE:TEX)$2.43 billion+7.1%
Joy Global (NYSE:JOY)$5.62 billion+6.3%
CNH Global NV (NYSE:CNH)$9.8 billion+4.9%
Martin Marietta Materials (NYSE:MLM)$3.55 billion+4.9%
Caterpillar (NYSE:CAT)$55.39 billion+4.1%
Fluor (NYSE:FLR)$8.9 billion+3.3%
Cummins (NYSE:CMI)$18.74 billion+2.7%
Software Summary: Finviz.com Stock Screener

Terex (NYSE:TEX) has risen 7.1% and is currently trading at $23.59 per share. The company's volume for the day so far is 1.9 million shares. This is about the same trading activity as there was yesterday. 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. 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 provides a way of evaluating whether a stock is relatively cheap or expensive. TEX has a P/B ratio of 1.31 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. 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: Using The Price-To-Book Ratio To Evaluate Companies

Joy Global (NYSE:JOY) has risen 6.3% to hit a current price of $56.44 per share. The company's volume is currently 1.5 million shares for the day, in keeping with its current daily average. 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. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for JOY is 1.3%, which is on the low end. This could indicate that that the stock is overpriced or that future dividends might be higher. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Due Diligence On Dividends

Increasing 4.9%, CNH Global NV (NYSE:CNH) is trading at $42.92 per share. So far today, the company's volume is 217,180 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 price/sales ratio measures a company's stock market price by its revenues. CNH's P/S ratio of 0.49 is fairly low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.

Martin Marietta Materials (NYSE:MLM) is up 4.9% to reach a current price of $81.22 per share. The company's volume for the day so far is 313,302 shares, 0.9 times the current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. P/E ratio for MLM is 56.1. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Find P/E And PEG Ratios

After rising 4.1%, Caterpillar (NYSE:CAT) is currently trading at a share price of $88.28. The company is trading at a volume of 6.2 million shares. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. CAT has a D/E ratio of 247%, which is relatively high. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. 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.

Fluor (NYSE:FLR) has moved up 3.3% and is currently trading at $55.05 per share. The company's volume is currently 961,061 shares for the day, 0.7 times the current daily average. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. FLR's capitalization ratio is 12.6%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. 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 2.7%, Cummins (NYSE:CMI) has reached a current price of $101.08. The company's volume for the day so far is 1.1 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 like 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 are useful in determining how attractive a potential or existing investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CMI's debt ratio of 49.8% is on the low side. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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