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Consumer Cyclical Sector's Biggest Movers for July 9, 2012
On a bad day for the market, the Nasdaq has decreased 0.3%, the S&P 500 has fallen 0.3% and the Dow is down 0.4%. 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) is down 0.6%, underperforming the market overall. The current biggest movers in the sector are:
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Rising 3.3%, Smith \x26 (Nasdaq:SWHC) is currently trading at $9.09 per share. The company's volume is currently 814,964 shares for the day, 0.3 times its current daily average. 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. SWHC has a gross profit margin of 35.1%. A company's operating margin is calculated by dividing operating income by revenues. With an operating profit margin of 19.8%, SWHC has a low one relative to its gross profit margin. 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. The company has a net profit margin of 3.9%.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. SWHC's debt ratio is 56.9%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Visteon (NYSE:VC) has decreased to $35.28 per share, a 3.1% fall. This morning, the company is trading a volume of 88,389 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. VC has a low gross profit margin of 12%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, VC's operating profit margin of -1.2% and net profit margin of 0.4% are low.
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 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. VC has a low debt-equity ratio of 43%. 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 is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
LeapFrog Enterprises (NYSE:LF) has risen 2.9% and is currently trading at $11.47 per share. At 281,394 shares, the company's volume so far today is 0.2 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. The gross profit margin for LF is 43.8%. The operating profit margin indicates how much EBIT is generated per dollar of sales. LF's operating profit margin is -11.9%. This shows that the company reported a net operating loss in the most recent quarter. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Net profit margin for the company is 6.7%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). LF's PEG ratio of 1.11 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.
Michael Kors (NYSE:KORS) is trading at $42.40 per share, down 2.6%. So far today, the company's volume is 983,150 shares. Trading activity is down from yesterday when 1.9 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. Margin analysis is a great way to understand the profitability of companies. KORS' gross profit margin is 58.2%. 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. KORS has an operating profit margin of 0%. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net margin is 11.3%.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. KORS has a high P/S ratio of 6.89. 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.
Falling 2.6%, Nortek (Nasdaq:NTK) is currently at a share price of $52.15. The company's volume is currently 5,600 shares for the day, zero times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. The gross profit margin for NTK is 29.1%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. NTK's operating profit margin of 4.8% is low relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. The company's net profit margin is negative. A negative net profit margin means the company spent more money than it made.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. NTK has a high capitalization ratio of 93.1%. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. 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.
Tesla Motors (Nasdaq:TSLA) is at $31.74 per share after an increase of 2.4%. So far today, the company's volume is 400,278 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. TSLA has a gross profit margin of 38.5%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. TSLA has an operating profit margin of -294.2%. This means that the company came in with a net operating loss in the most recent quarter.
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 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. TSLA's P/B ratio of 21.74 shows that its share price is higher 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 ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Allison Transmission Holdings (NYSE:ALSN) is up 2.1% to reach a current price of $18.78 per share. The company's volume is currently 217,047 shares for the day, 0.4 times the current three-month average. 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. ALSN's gross profit margin is 56.7%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. With a net profit margin of 5.5%, the company has a high one compared to its gross profit margin. A company with a high profit margin has a greater capability to maintain strong earnings during a recession than does a company with a low profit margin, providing investors with a greater margin of safety. The operating margin ratio can also be useful for tracking an individual company's performance across time, where an increasing ratio is good and a declining ratio may provide cause for concern that a company's business model is weakening. Operating profit margin for ALSN is 25.7%.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. ALSN has a dividend yield of 1.3%, which is fairly low. If you are an income investor, this stock may not be attractive to you. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Investment Valuation Ratios: Dividend Yield
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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) is down 0.6%, underperforming the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Smith \x26 Wesson Holding Corporation (Nasdaq:SWHC) | $574.9 million | +3.3% |
| Visteon Corporation (NYSE:VC) | $1.91 billion | -3.1% |
| LeapFrog Enterprises, Inc. (NYSE:LF) | $744.1 million | +2.9% |
| Michael Kors Holdings Ltd (NYSE:KORS) | $8.39 billion | -2.6% |
| Nortek Inc (Nasdaq:NTK) | $810 million | -2.6% |
| Tesla Motors Inc (Nasdaq:TSLA) | $3.26 billion | +2.4% |
| Allison Transmission Holdings Inc (NYSE:ALSN) | $3.34 billion | +2.1% |
Rising 3.3%, Smith \x26 (Nasdaq:SWHC) is currently trading at $9.09 per share. The company's volume is currently 814,964 shares for the day, 0.3 times its current daily average. 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. SWHC has a gross profit margin of 35.1%. A company's operating margin is calculated by dividing operating income by revenues. With an operating profit margin of 19.8%, SWHC has a low one relative to its gross profit margin. 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. The company has a net profit margin of 3.9%.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. SWHC's debt ratio is 56.9%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Visteon (NYSE:VC) has decreased to $35.28 per share, a 3.1% fall. This morning, the company is trading a volume of 88,389 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. VC has a low gross profit margin of 12%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, VC's operating profit margin of -1.2% and net profit margin of 0.4% are low.
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 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. VC has a low debt-equity ratio of 43%. 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 is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
LeapFrog Enterprises (NYSE:LF) has risen 2.9% and is currently trading at $11.47 per share. At 281,394 shares, the company's volume so far today is 0.2 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. The gross profit margin for LF is 43.8%. The operating profit margin indicates how much EBIT is generated per dollar of sales. LF's operating profit margin is -11.9%. This shows that the company reported a net operating loss in the most recent quarter. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Net profit margin for the company is 6.7%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). LF's PEG ratio of 1.11 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.
Michael Kors (NYSE:KORS) is trading at $42.40 per share, down 2.6%. So far today, the company's volume is 983,150 shares. Trading activity is down from yesterday when 1.9 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. Margin analysis is a great way to understand the profitability of companies. KORS' gross profit margin is 58.2%. 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. KORS has an operating profit margin of 0%. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net margin is 11.3%.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. KORS has a high P/S ratio of 6.89. 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.
Falling 2.6%, Nortek (Nasdaq:NTK) is currently at a share price of $52.15. The company's volume is currently 5,600 shares for the day, zero times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. The gross profit margin for NTK is 29.1%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. NTK's operating profit margin of 4.8% is low relative to its gross profit margin. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. The company's net profit margin is negative. A negative net profit margin means the company spent more money than it made.
Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. NTK has a high capitalization ratio of 93.1%. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. 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.
Tesla Motors (Nasdaq:TSLA) is at $31.74 per share after an increase of 2.4%. So far today, the company's volume is 400,278 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. TSLA has a gross profit margin of 38.5%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. TSLA has an operating profit margin of -294.2%. This means that the company came in with a net operating loss in the most recent quarter.
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 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. TSLA's P/B ratio of 21.74 shows that its share price is higher 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 ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Allison Transmission Holdings (NYSE:ALSN) is up 2.1% to reach a current price of $18.78 per share. The company's volume is currently 217,047 shares for the day, 0.4 times the current three-month average. 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. ALSN's gross profit margin is 56.7%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. With a net profit margin of 5.5%, the company has a high one compared to its gross profit margin. A company with a high profit margin has a greater capability to maintain strong earnings during a recession than does a company with a low profit margin, providing investors with a greater margin of safety. The operating margin ratio can also be useful for tracking an individual company's performance across time, where an increasing ratio is good and a declining ratio may provide cause for concern that a company's business model is weakening. Operating profit margin for ALSN is 25.7%.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. ALSN has a dividend yield of 1.3%, which is fairly low. If you are an income investor, this stock may not be attractive to you. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Investment Valuation Ratios: Dividend Yield
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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