The market is currently up, with the Nasdaq increasing 0.5%, the S&P 500 up 0.3% and the Dow climbing 0.1%. 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 up 0.1%, underperforming the market overall. The biggest movers in the sector are currently:
|Company||Market Cap||Percentage Change|
|Vera Bradley (Nasdaq:VRA)||$993.4 million||-6%|
|Navistar (NYSE:NAV)||$1.58 billion||+4.6%|
|Dorman Products (Nasdaq:DORM)||$1.03 billion||+2.8%|
|Movado Group (NYSE:MOV)||$722.8 million||+2.6%|
|Tata Motors Limited (NYSE:TTM)||$12.27 billion||-1.9%|
|Westport Innovations Inc (Nasdaq:WPRT)||$1.9 billion||+1.8%|
|Polaris Industries (NYSE:PII)||$5.09 billion||+1.8%|
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Slipping 6%, Vera Bradley (Nasdaq:VRA) is currently trading at $23.04 per share. The company's volume is currently 801,392 shares for the day, 1.4 times the average volume over the last three months. 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 a 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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 getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). VRA has a PEG ratio of 0.88, which is consistent 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.
Navistar (NYSE:NAV) is currently trading at $24.03 per share, a 4.6% increase. The company's volume for the morning is 1.1 million shares. This is 0.9 times its average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. A price/sales ratio is derived by dividing stock market price by company sales. NAV has a P/S ratio of 0.16, on the low end. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. 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.
Dorman Products (Nasdaq:DORM) has risen 2.8% to hit a current price of $29.11 per share. At 28,803 shares, the company's volume so far today is with trading activity in keeping with yesterday's. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. DORM's debt ratio of 16.6% is on the low side. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Movado Group (NYSE:MOV) is at $29.50 per share after an increase of 2.6%. This morning, the company is trading a volume of 148,728 shares. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. MOV has a P/B ratio of 1.9 which 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
At $21.60, Tata Motors Limited (NYSE:TTM) has slipped 1.9%. So far today, the company's volume is 376,827 shares, 0.3 times its current three-month average. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. TTM is in line with the industry average with a P/E ratio of 6.2. 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 Use The P/E Ratio And PEG To Tell The Future Of A Stock
After rising 1.8%, Westport Innovations Inc (Nasdaq:WPRT) is currently trading at a share price of $35.23. The company's volume for the day so far is 302,815 shares. This is 0.3 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for WPRT is a low 36%. 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.
Rising 1.8%, Polaris Industries (NYSE:PII) is currently trading at $75.62 per share. So far today, 111,312 shares have changed hands, on pace to finish the day below yesterday's volume of 645,209 shares. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. The debt-equity ratio of 19% is relatively low. 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.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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.