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Consumer Cyclical Sector's Biggest Movers for July 16, 2012
The Nasdaq has moved little, the S&P 500 is trading down 0.1% and the Dow has declined 0.3% so far today. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.
The Consumer Cyclical sector (XLY) has fallen 0.3% despite little change in the market overall. The biggest movers in the sector so far are:
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Steven (Nasdaq:SHOO) has decreased to $33.45 per share, a 3.8% fall. So far today, the company's volume is 254,843 shares. This is 0.3 times the current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. SHOO has a gross profit margin of 38.1%. A company's operating margin is calculated by dividing operating income by revenues. Relative to its gross profit margin, SHOO's operating margin of 13.3% is on the low side. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. Net profit margin for the company is 9.4%.
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. The P/B ratio for SHOO is 2.92, indicating that the stock is trading for more than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Tata Motors Limited (NYSE:TTM) is trading at $20.68 per share, down 3.5%. So far today, the company's volume is 409,692 shares, while it was 1.4 million shares yesterday. The trading volume for a stock indicates the level of investor interest. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. TTM's gross profit margin is 30.5%. Operating margin for TTM is 11.5% and net margin is 5.6%, both low relative to its gross margin.
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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). Compared to the industry average of 10.14, TTM's P/E ratio of 17.5 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
Smith (Nasdaq:SWHC) is up 3.3% to reach a current price of $9.95 per share. The company's volume for the day so far is 1.4 million shares. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for SWHC is 35.1%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. The operating margin for SWHC is 19.8%, which is low compared its gross profit margin. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net margin is 3.9%.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). SWHC's PEG ratio of 0.8 is in line with the industry average. 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.
Dunkin' Brands Group (Nasdaq:DNKN) has risen 3.1% and is currently trading at $35.77 per share. The company's volume for the day so far is 704,199 share, 0.6 times the average volume over the last three months. If a stock price moves on high volume, this means that the change is a significant one. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. DNKN has a gross profit margin of 81.2%, which is on the high end. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Net profit margin compares net income with sales. With a net profit margin of 9.7%, the company has a high one compared to its gross profit margin. Companies with profit margins reflecting a competitive advantage are able to improve their market share during the hard times - leaving them even better positioned when things improve again. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. DNKN has an operating profit margin of 34%.
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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. DNKN has a low dividend yield of 1.7%. A company with a low dividend yield may be a safer investment in the long run. 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: Investment Valuation Ratios: Dividend Yield
Rising 2.8%, Westport Innovations Inc (Nasdaq:WPRT) is currently trading at $35.04 per share. This morning, the company's volume is 419,138 shares. This is 0.3 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. WPRT has a negative operating margin of -13%. This shows that the company reported a net operating loss in the most recent quarter.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The debt ratio is calculated by dividing total liabilities by total assets. WPRT has a low debt ratio of 35.2%. 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.
Cascade (NYSE:CASC) has fallen 2.6% and is currently trading at $47.75 per share. At 29,398 shares, the company's volume so far today is below yesterday's volume of 35,679 shares. 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 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for CASC is 33%. Compared with its gross profit margin, CASC's operating profit margin of 14.6% and net profit margin of 11.4% are low.
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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The debt-equity ratio of 2% is relatively low. 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.
Lear (NYSE:LEA) is down 2.3% to reach $37.35 per share. So far today, the company's volume is 183,014 shares. Volume is an important indicator because it indicates how significant a price shift is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. LEA has a low gross profit margin of 9.7%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. LEA's operating margin of 5.1% and net margin of 3.6% are low relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. LEA has a fairly low capitalization ratio of 21.3%. Investors generally consider a company with low debt and high equity levels is a good quality investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.
The Consumer Cyclical sector (XLY) has fallen 0.3% despite little change in the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Steven Madden, Ltd. (Nasdaq:SHOO) | $1.54 billion | -3.8% |
| Tata Motors Limited (ADR) (NYSE:TTM) | $11.95 billion | -3.5% |
| Smith & Wesson Holding Corporation (Nasdaq:SWHC) | $629.2 million | +3.3% |
| Dunkin\' Brands Group Inc (Nasdaq:DNKN) | $4.18 billion | +3.1% |
| Westport Innovations Inc. (USA) (Nasdaq:WPRT) | $1.87 billion | +2.8% |
| Cascade Corporation (NYSE:CASC) | $546.3 million | -2.6% |
| Lear Corporation (NYSE:LEA) | $3.81 billion | -2.3% |
Steven (Nasdaq:SHOO) has decreased to $33.45 per share, a 3.8% fall. So far today, the company's volume is 254,843 shares. This is 0.3 times the current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. SHOO has a gross profit margin of 38.1%. A company's operating margin is calculated by dividing operating income by revenues. Relative to its gross profit margin, SHOO's operating margin of 13.3% is on the low side. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. Net profit margin for the company is 9.4%.
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. The P/B ratio for SHOO is 2.92, indicating that the stock is trading for more than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Tata Motors Limited (NYSE:TTM) is trading at $20.68 per share, down 3.5%. So far today, the company's volume is 409,692 shares, while it was 1.4 million shares yesterday. The trading volume for a stock indicates the level of investor interest. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. TTM's gross profit margin is 30.5%. Operating margin for TTM is 11.5% and net margin is 5.6%, both low relative to its gross margin.
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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). Compared to the industry average of 10.14, TTM's P/E ratio of 17.5 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
Smith (Nasdaq:SWHC) is up 3.3% to reach a current price of $9.95 per share. The company's volume for the day so far is 1.4 million shares. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. The gross profit margin for SWHC is 35.1%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. The operating margin for SWHC is 19.8%, which is low compared its gross profit margin. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net margin is 3.9%.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). SWHC's PEG ratio of 0.8 is in line with the industry average. 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.
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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. DNKN has a low dividend yield of 1.7%. A company with a low dividend yield may be a safer investment in the long run. 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: Investment Valuation Ratios: Dividend Yield
Rising 2.8%, Westport Innovations Inc (Nasdaq:WPRT) is currently trading at $35.04 per share. This morning, the company's volume is 419,138 shares. This is 0.3 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. WPRT has a negative operating margin of -13%. This shows that the company reported a net operating loss in the most recent quarter.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The debt ratio is calculated by dividing total liabilities by total assets. WPRT has a low debt ratio of 35.2%. 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.
Cascade (NYSE:CASC) has fallen 2.6% and is currently trading at $47.75 per share. At 29,398 shares, the company's volume so far today is below yesterday's volume of 35,679 shares. 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 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for CASC is 33%. Compared with its gross profit margin, CASC's operating profit margin of 14.6% and net profit margin of 11.4% are low.
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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The debt-equity ratio of 2% is relatively low. 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.
Lear (NYSE:LEA) is down 2.3% to reach $37.35 per share. So far today, the company's volume is 183,014 shares. Volume is an important indicator because it indicates how significant a price shift is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. LEA has a low gross profit margin of 9.7%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. LEA's operating margin of 5.1% and net margin of 3.6% are low relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. LEA has a fairly low capitalization ratio of 21.3%. Investors generally consider a company with low debt and high equity levels is a good quality investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.
by
Investopedia Staff
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