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Tickers in this Article: RUSHB, KORS, TRLG, HELE, HOG, RL, NAV
The Nasdaq has fallen 0.5%, the S&P 500 remains relatively unchanged and the Dow is trading down 0.2% after the morning's trading. 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.

On a quiet day for the market overall so far, the Consumer Cyclical sector (XLY) has slipped 0.5% and its biggest movers are currently:
CompanyMarket CapPercentage Change
Rush Enterprises, Inc. (Nasdaq:RUSHB)$542.8 million-9.8%
Michael Kors Holdings Ltd (NYSE:KORS)$8.22 billion-6.1%
True Religion Apparel, Inc. (Nasdaq:TRLG)$738.6 million-5.9%
Helen of Troy Limited (Nasdaq:HELE)$934.3 million+4.3%
Harley-Davidson (NYSE:HOG)$10.9 billion-4.3%
Polo Ralph Lauren (NYSE:RL)$8.7 billion-3.9%
Navistar International Corporation (NYSE:NAV)$1.5 billion+3.8%
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After a decline of 9.8%, Rush Enterprises (Nasdaq:RUSHB) has hit a share price of $12.67. This morning, the company is trading a volume of 15,275 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Falling 6.1%, Michael Kors (NYSE:KORS) is currently at a share price of $40. So far today, the company's volume is 1.8 million shares, 0.7 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. KORS' gross profit margin is 58.2%. A company's operating margin is calculated by dividing operating income by revenues. KORS has an operating profit margin of 0%. 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's net profit margin is 11.3%.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). The P/E ratio for KORS is 54.6, above the industry average of 15.0. 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. 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 Find P/E And PEG Ratios

True Religion Apparel (Nasdaq:TRLG) has fallen 5.9% and is currently trading at $26.94 per share. So far today, the company's volume is 632,721 shares. This is greater than yesterday's volume of 201,713 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. TRLG has a gross profit margin of 67.7%. Relative to its gross profit margin, TRLG's operating profit margin of 16.1% and net profit margin of 10.7% are high.

A company's investment value can be 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 price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. TRLG has a PEG ratio of 1.05, which is consistent 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.

Helen of (Nasdaq:HELE) is currently trading at $30.71 per share, a 4.3% increase. The company's volume for the day so far is 113,850 share, 0.7 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Margin analysis is a great way to understand the profitability of companies. HELE's gross profit margin is 43%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. HELE's operating profit margin is 12.4%. 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. The company has a net profit margin of 9.3%.

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 debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for HELE is a low 44.5%. 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.

Harley-Davidson (NYSE:HOG) is down 4.3% to reach $45.07 per share. The company is currently trading a volume of 1.4 million shares. Volume is an important indicator because it indicates how significant a price shift is. Margin ratios highlight companies that are worth further examination. The gross profit margin for HOG is 40.1%. 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. HOG has an operating profit margin of 16.3%, which 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. Net profit margin for the company is 12.2%.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. HOG has a low dividend yield of 1.3%. This may indicate that the company's stock is overpriced. 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: Dividend Yield For The Downturn

Currently trading at $138.04 per share, Polo Ralph Lauren (NYSE:RL) has fallen 3.9%. The company's volume is currently 486,457 shares for the day, 0.4 times the current daily average. If a stock price moves on high volume, this means that the change is a significant one. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A price/sales ratio is derived by dividing stock market price by company sales. RL's P/S ratio of 2.35 is on the high side. 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.

Increasing 3.8%, Navistar (NYSE:NAV) is trading at $22.80 per share. So far today, 1.9 million shares of the company's stock have changed hands. This is below yesterday's volume of 6.3 million 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. 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. NAV has a low gross profit margin of 18.4%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. 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. NAV has a negative operating margin of -6.9%. In other words, the company reported a net operating loss in the most recent quarter. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. Relative to its gross profit margin, the company has a low net profit margin of 9.4%. This is potentially worrying, as companies with low profit margins are vulnerable to poor market conditions.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. NAV's capitalization ratio of 118% is relatively high. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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