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Tickers in this Article: VRTS, FCNCA, LFC, RGA, BLK, SIVB, ACE
After the morning's trading, the Nasdaq is trading up 0.2%, the S&P 500 has been relatively flat and the Dow remains relatively unchanged. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

The Financial sector (XLF) has increased 0.3% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
Virtus Investment Partners Inc (Nasdaq:VRTS)0.4 million+2%
First Citizens BancShares Inc. (Nasdaq:FCNCA).67 billion+2%
China Life Insurance Company Ltd. (ADR) (NYSE:LFC).05 billion-2%
Reinsurance Group of America Inc (NYSE:RGA).13 billion+1.7%
BlackRock (NYSE:BLK).88 billion+1.5%
SVB Financial Group (Nasdaq:SIVB).5 billion+1.4%
ACE (NYSE:ACE).52 billion+1.2%
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Virtus Investment Partners (Nasdaq:VRTS) is currently trading at $86 per share, a 2% increase. So far today, the company's volume is 2,391 shares. The trading volume for a stock indicates the level of investor interest. 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. VRTS has a fairly low capitalization ratio of 9.1%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

First Citizens BancShares (Nasdaq:FCNCA) has risen 2% and is currently trading at $166 per share. With 1,300 shares changing hands so far today, the company's volume is 0.3 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. FCNCA has a P/E ratio of 10.2. 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

At $41.13, China Life Insurance Company Ltd (NYSE:LFC) has slipped 2%. The company is trading at a volume of 817,024 shares. This is more trading activity than there was yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. 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. The P/S ratio for LFC is a high 1.28. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Reinsurance Group of America (NYSE:RGA) has risen 1.7% to hit a current price of $56.98 per share. The company's volume is currently 56,102 shares for the day, 0.2 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. RGA has a P/B ratio of 0.67, which shows that its book value is higher than its share price. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) 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

Increasing 1.5%, BlackRock (NYSE:BLK) is trading at $175.62 per share. So far today, 136,077 shares have changed hands. 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. 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. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. Dividend yield for BLK is 3.5%. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Due Diligence On Dividends

SVB Financial (Nasdaq:SIVB) has moved up 1.4% and is currently trading at $57.03 per share. At 44,489 shares, the company's volume so far today is 0.2 times the current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. The debt ratio is calculated by dividing total liabilities by total assets. SIVB has a high debt ratio of 91.9%. 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.

After an increase of 1.2%, ACE (NYSE:ACE) has reached a current price of $73.18. The company's volume for the day so far is 351,305 shares. This is about the same trading activity as there was yesterday. 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. ACE has a debt-equity ratio of 18%, which is on the low side. This shows that the company's assets are financed primarily through equity. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

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. 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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