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Tickers in this Article: LKQ, KORS, MLHR, SCSS, OXM, AXL, UA
The market is currently down, with the Nasdaq down 1.5%, the S&P 500 slipping 0.9% and the Dow declining 1%. 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 0.9%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
LKQ Corporation (Nasdaq:LKQ)$5.01 billion-5.9%
Michael Kors Holdings Ltd (NYSE:KORS)$8.33 billion-4.4%
Herman Miller, Inc. (Nasdaq:MLHR)$975.8 million+4%
Select Comfort Corp. (Nasdaq:SCSS)$1.1 billion+3.4%
Oxford Industries, Inc. (NYSE:OXM)$729 million-3%
American Axle & Manufact. Holdings, Inc. (NYSE:AXL)$738.7 million+2.6%
Under Armour Inc (NYSE:UA)$4.86 billion-2.6%
Software Summary: Finviz.com Stock Screener

Falling 5.9%, LKQ (Nasdaq:LKQ) is currently at a share price of $31.94. At 1.1 million shares, the company's volume so far today is 1.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Compared to the industry average of 11.53, LKQ's P/E ratio of 22.3 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Profit With The Power Of Price-To-Earnings

After a decline of 4.4%, Michael Kors (NYSE:KORS) has hit a share price of $41.30. The company's volume for the day so far is 1.7 million shares. This is 0.4 times its average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin ratios highlight companies that are worth further examination. KORS has a gross profit margin of 58.2%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. KORS has an operating profit margin of 0%. Net profit margin compares net income with sales. Net profit margin for the company is 11.3%.

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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. KORS' PEG ratio of 1.96 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

After rising 4%, Herman Miller (Nasdaq:MLHR) is currently trading at a share price of $17.40. At 318,160 shares, the company's volume so far today is more than yesterday's 234,466 shares. Volume is an important indicator because it indicates how significant a price shift is. 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. MLHR's gross profit margin is 33.6%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. MLHR's operating profit margin is 6.3%. Net profit margins are those generated from all phases of a business, including taxes. Net margin is 4.6%.

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 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. MLHR has a P/B ratio of 3.77 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. 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

Select (Nasdaq:SCSS) has moved up 3.4% and is currently trading at $19.99 per share. The company is currently trading a volume of 895,706 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for SCSS is 64.8%. SCSS has an operating profit margin of 13.1% and a net profit margin of 8.2%, both high compared to its gross profit margin.

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. The price/sales ratio measures a company's stock market price by its revenues. SCSS' P/S ratio of 2.25 is on the high side. This could be a good sign if the share price increases. 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.

Oxford Industries (NYSE:OXM) is trading at $42.75 per share, down 3%. So far today, the company's volume is 22,236 shares, 0.2 times its average over the past three months. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. OXM has a gross profit margin of 58.1%. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. The company's net margin of 3.7% is high relative to its gross profit margin. This usually means that it also has one or more advantages over its competition. The operating profit margin indicates how much EBIT is generated per dollar of sales. OXM has an operating profit margin of 14.2%.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. OXM has a capitalization ratio of 32.5%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

American Axle & Manufact. Holdings (NYSE:AXL) has risen 2.6% and is currently trading at $10.13 per share. So far today, the company's volume is 609,752 shares. This is 0.4 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. 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. AXL has a low gross profit margin of 23.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. AXL's operating margin of 10.3% and net margin of 5.8% are low relative to its gross margin.

Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. AXL has a debt ratio of 115%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Currently trading at $90.85 per share, Under Armour (NYSE:UA) has fallen 2.6%. This morning, 646,688 shares have been traded, while it was 1.4 million shares yesterday. 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. 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. UA has a gross profit margin of 50.6%. The operating profit margin is a rough measure of the operating leverage a company can achieve in the conduct of the operational part of its business. Operating profit margin for UA is 6.3%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company has a net profit margin of 6.4%.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. The P/E ratio for UA is 50.8, above the industry average of 14.39. This could mean that the market is expecting big things over the next few months or years. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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