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Tickers in this Article: THO, ESLT, JOY, TXI, CAT, NPK, SXI
On a good day for the market, the Nasdaq has climbed 0.3%, the S&P 500 is trading up 0.6% and the Dow has increased 0.7%. 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 up 0.8%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Thor Industries (NYSE:THO)$1.73 billion+3.4%
Elbit Systems Ltd (Nasdaq:ESLT)$1.39 billion+3.1%
Joy Global (NYSE:JOY)$5.84 billion+3%
Texas Industries (NYSE:TXI)$1.14 billion+2.6%
Caterpillar (NYSE:CAT)$56.9 billion+2.2%
National Presto Industries (NYSE:NPK)$506.6 million+2.1%
Standex (NYSE:SXI)$576 million+2.1%
Beginner's Guide To

After rising 3.4%, Thor Industries (NYSE:THO) is currently trading at a share price of $33.79. So far today, 224,861 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. 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. 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. THO's dividend yield is 2.2%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn

Increasing 3.1%, Elbit Systems Ltd (Nasdaq:ESLT) is trading at $33.38 per share. The company's volume is currently 13,308 shares for the day, 0.9 times the average daily volume. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. ESLT's P/B ratio of 1.53 shows that its share price is higher 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Rising 3%, Joy Global (NYSE:JOY) is currently trading at $56.87 per share. This morning, the company is trading a volume of 710,543 shares. Volume is used to evaluate how meaningful the price movement of a stock 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. JOY's P/E ratio of 8.2 falls below the industry average of 11.36. 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. 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 Use The P/E Ratio And PEG To Tell The Future Of A Stock

Texas Industries (NYSE:TXI) has moved up 2.6% and is currently trading at $41.81 per share. At 84,491 shares, the company's volume so far today is 0.4 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. A price/sales ratio is derived by dividing stock market price by company sales. TXI's P/S ratio of 1.38 is on the high side. 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.

Caterpillar (NYSE:CAT) is up 2.2% to reach a current price of $88.99 per share. So far today, the company's volume is 2.5 million shares. This is on pace to reach yesterday's trading volume of 5.6 million shares. If a stock price moves on high volume, this means that the change is a significant one. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CAT has a high debt ratio of 82.1%. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

National Presto Industries (NYSE:NPK) has risen 2.1% to hit a current price of $75.13 per share. So far today, the company's volume is 7,500 shares, 0.2 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for NPK is a high 18%. This could mean either that the stock is underpriced or that the company has fallen on hard times and future dividends will not be as high as previous ones. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Investment Valuation Ratios: Dividend Yield

Standex (NYSE:SXI) has risen 2.1% and is currently trading at $46.61 per share. The company is currently trading a volume of 9,621 shares. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. PEG ratio for SXI is consistent with the industry average at 1.26. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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.

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