The Nasdaq is trading down 0.8%, the S&P 500 is down 0.6% and the Dow has slipped 0.8%, marking a bad morning for the market.
The Oil and Gas Operations sector (DIG) is down 2.5%, underperforming the market overall. The current biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|InterOil Corporation (NYSE:IOC)||$3.84 billion||-4.4%|
|Delek US Holdings (NYSE:DK)||$1.54 billion||+3.8%|
|Clayton Williams Energy (Nasdaq:CWEI)||$584.5 million||-3.2%|
|China Petroleum & Chemical Corp (NYSE:SNP)||$81.72 billion||-3.1%|
|Hess (NYSE:HES)||$17.26 billion||-2.5%|
|CNOOC Limited (NYSE:CEO)||$84.6 billion||-2.4%|
|Venoco (NYSE:VQ)||$687.2 million||+2.3%|
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After a decline of 4.4%, InterOil Corporation (NYSE:IOC) has hit a share price of $76.03. So far today, the company's volume is 385,846 shares, in keeping with the average volume over the past three months. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. IOC has a low capitalization ratio of 10.7%. Investors generally consider a company with low debt and high equity levels is a good quality investment. 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.
Delek US Holdings (NYSE:DK) has moved up 3.8% and is currently trading at $27.26 per share. The company's volume is currently 256,246 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. 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. DK's P/E ratio of 7.7 falls below the industry average of 11.46. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Can Investors Trust the P/E Ratio?
At $46.52, Clayton Williams Energy (Nasdaq:CWEI) has slipped 3.2%. The company's volume is currently 9,896 shares for the day, 0.3 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. 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/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. CWEI's stock is trading for more than its book value with a P/B ratio of 1.47. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
China Petroleum & Chemical Corp (NYSE:SNP) is down 3.1% to reach $91.33 per share. The company's volume for the day so far is 46,808 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. SNP has a dividend yield of 3%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Guide To Stock-Picking Strategies: Income Investing
Hess (NYSE:HES) is trading at $49.27 per share, down 2.5%. At 745,597 shares, the company's volume so far today is 0.3 times its current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. 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-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. HES has a low debt-equity ratio of 39%. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
CNOOC Limited (NYSE:CEO) is currently trading at a share price of $184.82, a 2.4% decline. The company's volume for the day so far is 21,185 shares. This is a sign that there will be less trading activity than there was yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CEO has a debt ratio of 31.4%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Venoco (NYSE:VQ) has risen 2.3% and is currently trading at $11.44 per share. At 536,645 shares, the company's volume so far today is 1.1 times the average daily volume. 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 can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. The P/S ratio for VQ is 1.86, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
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.