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Tickers in this Article: BIG, GES, FRED, CHU, CTRP, NTES, DTG
It's been a bad day for the market after the morning's trading. The Nasdaq is trading down 0.2%; the S&P 500 is down 0.4%; and the Dow has slipped 0.6%.

The Services sector (IYC) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Big Lots, Inc (NYSE:BIG)$2.47 billion-22%
Guess (NYSE:GES)$3.02 billion-19.9%
Fred\'s (Nasdaq:FRED)$556.1 million-9.1%
China Unicom (Hong Kong) Limited (NYSE:CHU)$37.82 billion+7.5% International, Ltd (Nasdaq:CTRP)$2.29 billion+6.3% Inc (Nasdaq:NTES)$6.39 billion+3.1%
Dollar Thrifty Automotive Group (NYSE:DTG)$2.11 billion+3%
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Shares of Big Lots, Inc (NYSE:BIG) are currently trading at $30.31, a steep decline of 22%. So far today, 8.5 million shares have changed hands, above yesterday's volume of 1.2 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for BIG is 2.38, indicating that the stock is trading for more 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. 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: Using The Price-To-Book Ratio To Evaluate Companies

Guess (NYSE:GES) is currently trading at $26.87 per share, after a steep drop of 19.9%. So far today, the company's volume is 6.2 million shares. This is 4.9 times its average volume over the past three months. Volume indicates the level of interest that investors have in a company at its current price. 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 GES is 11.5, below the industry average of 20.97. 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. 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

Fred's (Nasdaq:FRED) is trading at $13.81 per share, down 9.1%. The company's volume is currently 301,981 shares for the day, 1.9 times its 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. FRED's P/S ratio of 0.28 is fairly low. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

China Unicom (Hong Kong) Limited (NYSE:CHU) has risen 7.5% to hit a current price of $17.26 per share. So far today, 667,418 shares have changed hands. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio is calculated by dividing total liabilities by total assets. CHU's debt ratio is 54.2%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies. International, Ltd (Nasdaq:CTRP) is currently trading at $16.99 per share, a 6.3% increase. This morning, 2.5 million shares have been traded,. 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 allow the investor to make a quick determination as to a company's investment value. 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. CTRP's debt-equity ratio of 6% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Rising 3.1%, Inc (Nasdaq:NTES) is currently trading at $50.30 per share. This morning, the company is trading a volume of 418,647 shares. This is 0.3 times the average volume over the last three months. A stock's volume conveys how excited investors are about it. 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 price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. PEG ratio for NTES is consistent with the industry average at 1.08. 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.

Dollar Thrifty Automotive Group (NYSE:DTG) has moved up 3% and is currently trading at $78.00 per share. The company's volume is currently 994,141 shares for the day, 1.4 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. DTG's P/B ratio of 3.18 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. 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: How Buybacks Warps The Price-To-Book Ratio

The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.

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