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Consumer/Non-Cyclical Stocks Making Big Moves on July 18, 2012
The market is on the rise this morning. The Nasdaq is up 1.2%; the S&P 500 has increased 0.6%; and the Dow has climbed 0.7%.
Despite a good day for the overall market so far, the Consumer/Non-Cyclical sector (XLP) is down 0.1% and its current biggest movers are:
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Owens (NYSE:OC) is at $29.21 per share after an increase of 2.5%. The company's volume is currently 374,539 shares for the day, 0.2 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin ratios highlight companies that are worth further examination. OC has a low gross profit margin of 24.6%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. OC has a negative operating margin of -0.9%. This shows that the company reported a net operating loss in the most recent quarter. Net profit margin is a good ratio for determining how a company is performing. The company's net margin is 3.8%, which is low compared to its gross margin. A low net profit margin may be a sign of a price war that is lowering profits.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. OC's P/B ratio of 0.97 indicates that its share price is lower than its book value. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Ralcorp Holdings (NYSE:RAH) has risen 2.3% and is currently trading at $62.28 per share. So far today, 569,023 shares of the company's stock have changed hands. Trading activity is down from yesterday when 883,633 shares changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. RAH has a low gross profit margin of 23.6%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. RAH has an operating profit margin of 7.2%, 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 is -5.2%. This shows that the company reported a net 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. RAH's P/S ratio of 0.85 is fairly low. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. 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 2.1%, Herbalife (NYSE:HLF) is trading at $50.55 per share. The company's volume is currently 539,782 shares for the day, 0.3 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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. HLF has a gross profit margin of 82.3%, which is on the high end. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. HLF has an operating profit margin of 16% and a net profit margin of 11.9%, both high compared to its gross profit margin.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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. HLF's P/B ratio of 9.76 shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: How Buybacks Warps The Price-To-Book Ratio
Cal-Maine Foods (Nasdaq:CALM) is up 1.9% to reach a current price of $37.39 per share. So far today, the company's volume is 35,672 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. CALM has a low gross profit margin of 18.7%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. CALM has an operating profit margin of 11.5% and a net profit margin of 5.5%, both low compared to its gross profit 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. 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. CALM's P/E ratio of 14.6 is under the industry average of 37.08. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Profit With The Power Of Price-To-Earnings
After rising 1.8%, Bunge (NYSE:BG) is currently trading at a share price of $62.90. The company's volume for the day so far is 303,948 share, 0.4 times its average over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. BG has a low gross profit margin of 5.3%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. Operating margin for BG is 0.8% and net margin is 1.3%, both low relative to its gross margin.
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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. BG's PEG ratio of 1.19 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.
Companhia de Bebidas das Americas (NYSE:ABV) is currently trading at $37.25 per share, a 1.6% increase. The company is trading at a volume of 578,961 shares. This is below yesterday's volume of 1.5 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. The gross profit margin for ABV is 72.5%. 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. Operating profit margin for ABV is 41.6%. Net profit margins are those generated from all phases of a business, including taxes. The company's net profit margin is 32%.
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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. ABV has a low debt ratio of 40.4%. 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.
Estee Lauder (NYSE:EL) has moved up 1.5% and is currently trading at $52.11 per share. The company's volume is currently 646,241 shares for the day, 0.2 times the current daily average. 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. 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. EL's gross profit margin of 79.2% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Compared with its gross profit margin, EL's operating profit margin of 9.4% and net profit margin of 8.9% are high.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for EL is 2.52, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
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.
Despite a good day for the overall market so far, the Consumer/Non-Cyclical sector (XLP) is down 0.1% and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Owens Corning (NYSE:OC) | $3.47 billion | +2.5% |
| Ralcorp Holdings, Inc. (NYSE:RAH) | $3.36 billion | +2.3% |
| Herbalife Ltd. (NYSE:HLF) | $5.79 billion | +2.1% |
| Cal-Maine Foods Inc (Nasdaq:CALM) | $876.3 million | +1.9% |
| Bunge Limited (NYSE:BG) | $9.01 billion | +1.8% |
| Companhia de Bebidas das Americas (ADR) (NYSE:ABV) | $114.26 billion | +1.6% |
| Estee Lauder Cos (NYSE:EL) | $19.96 billion | +1.5% |
Owens (NYSE:OC) is at $29.21 per share after an increase of 2.5%. The company's volume is currently 374,539 shares for the day, 0.2 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin ratios highlight companies that are worth further examination. OC has a low gross profit margin of 24.6%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Investors in growth stocks or short-term traders may be less interested in the operating margin ratio. OC has a negative operating margin of -0.9%. This shows that the company reported a net operating loss in the most recent quarter. Net profit margin is a good ratio for determining how a company is performing. The company's net margin is 3.8%, which is low compared to its gross margin. A low net profit margin may be a sign of a price war that is lowering profits.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. OC's P/B ratio of 0.97 indicates that its share price is lower than its book value. Industries that require more infrastructure capital (for each dollar of profit) will usually trade at P/B ratios much lower than those that don't. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Ralcorp Holdings (NYSE:RAH) has risen 2.3% and is currently trading at $62.28 per share. So far today, 569,023 shares of the company's stock have changed hands. Trading activity is down from yesterday when 883,633 shares changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. RAH has a low gross profit margin of 23.6%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin can be an important ratio for some investors, particularly those investing in weaker companies or companies in cyclical industries. RAH has an operating profit margin of 7.2%, 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 is -5.2%. This shows that the company reported a net 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. RAH's P/S ratio of 0.85 is fairly low. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. 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 2.1%, Herbalife (NYSE:HLF) is trading at $50.55 per share. The company's volume is currently 539,782 shares for the day, 0.3 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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. HLF has a gross profit margin of 82.3%, which is on the high end. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. HLF has an operating profit margin of 16% and a net profit margin of 11.9%, both high compared to its gross profit margin.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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. HLF's P/B ratio of 9.76 shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: How Buybacks Warps The Price-To-Book Ratio
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. 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. CALM's P/E ratio of 14.6 is under the industry average of 37.08. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Profit With The Power Of Price-To-Earnings
After rising 1.8%, Bunge (NYSE:BG) is currently trading at a share price of $62.90. The company's volume for the day so far is 303,948 share, 0.4 times its average over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. BG has a low gross profit margin of 5.3%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. Operating margin for BG is 0.8% and net margin is 1.3%, both low relative to its gross margin.
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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. BG's PEG ratio of 1.19 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.
Companhia de Bebidas das Americas (NYSE:ABV) is currently trading at $37.25 per share, a 1.6% increase. The company is trading at a volume of 578,961 shares. This is below yesterday's volume of 1.5 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. The gross profit margin for ABV is 72.5%. 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. Operating profit margin for ABV is 41.6%. Net profit margins are those generated from all phases of a business, including taxes. The company's net profit margin is 32%.
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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. ABV has a low debt ratio of 40.4%. 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.
Estee Lauder (NYSE:EL) has moved up 1.5% and is currently trading at $52.11 per share. The company's volume is currently 646,241 shares for the day, 0.2 times the current daily average. 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. 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. EL's gross profit margin of 79.2% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Compared with its gross profit margin, EL's operating profit margin of 9.4% and net profit margin of 8.9% are high.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for EL is 2.52, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
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.
by
Investopedia Staff
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