Filed Under: ,
Tickers in this Article: AVP, REV, POST, BTH, BUD, THS, CCU
The Nasdaq has moved up 0.3%, the S&P 500 has decreased 0.2% and the Dow has declined 0.1% after the morning's trading.

The Consumer/Non-Cyclical sector (XLP) is up 0.3% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
Avon Products (NYSE:AVP)$6.89 billion+3.7%
Revlon, Inc. (NYSE:REV)$762.2 million+2.3%
Post Holdings Inc (NYSE:POST)$1.12 billion+2.2%
Blyth, Inc. (NYSE:BTH)$626 million+2.1%
Anheuser-Busch InBev NV (ADR) (NYSE:BUD)$127.67 billion-2%
TreeHouse Foods Inc. (NYSE:THS)$2.27 billion-1.9%
Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU)$4.21 billion-1.6%
Broker Summary: Fidelity Online Brokerage

Avon (NYSE:AVP) has risen 3.7% to hit a current price of $16.54 per share. At 2.9 million shares, the company's volume so far today is 0.6 times the average daily volume. 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. 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. The gross profit margin for AVP is 64.7%. AVP has an operating profit margin of 2.8% and a net profit margin of 3.6%, both high compared to its gross profit 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 favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. AVP has a P/B ratio of 4.36 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio

After an increase of 2.3%, Revlon (NYSE:REV) has reached a current price of $14.90. So far today, the company's volume is 10,280 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. REV has a gross profit margin of 69.1%. Operating margin for REV is 13.4% and net margin is 3.7%, both high relative to its gross margin.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. REV has a low P/S ratio of 0.65. Low P/S ratios can indicate unrecognized value potential - so long as other criteria like high profit margins, low debt levels and growth prospects are in place. 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.

Post Holdings (NYSE:POST) is up 2.2% to reach a current price of $33.33 per share. At 42,425 shares, the company's volume so far today is lighter than yesterday's volume of 114,020 shares. 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 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 POST is 44.1%. Net profit margin is a good ratio for determining how a company is performing. Net profit margin is -55.6%. This shows that the company reported a net loss in the most recent quarter. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. POST's operating profit margin is 13.3%.

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 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 37.46, POST's P/E ratio of 48.7 is quite high. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?

Blyth (NYSE:BTH) is at $37.10 per share after an increase of 2.1%. So far today, 33,353 shares have changed hands. This is 0.2 times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. BTH has a gross profit margin of 64.2%. Relative to its gross profit margin, BTH's operating profit margin of 6.9% and net profit margin of 1.3% are high.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. BTH's stock is trading for more than its book value with a P/B ratio of 3.89. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Slipping 2%, Anheuser-Busch InBev NV (NYSE:BUD) is currently trading at $77.89 per share. At 673,789 shares, the company's volume so far today is 0.4 times the current daily average. The trading volume for a stock indicates the level of investor interest. 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 price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for BUD is a high 2.51. 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 compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Falling 1.9%, TreeHouse Foods (NYSE:THS) is currently at a share price of $62. The company is currently trading a volume of 43,624 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. 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. THS has a low gross profit margin of 24.8%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. THS' operating margin of 8.7% and net margin of 4.6% are low relative to its gross margin.

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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. THS' debt ratio is 55.5%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Currently trading at $65 per share, Compania Cervecerias Unidas S.A (NYSE:CCU) has fallen 1.6%. The company's volume is currently 24,653 shares for the day, below yesterday's volume of 97,113 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. CCU has a low dividend yield of 1.1%. This could indicate that that the stock is overpriced or that future dividends might be higher. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

comments powered by Disqus

Trading Center