Filed Under: ,
Tickers in this Article: LUFK, OIS, CWEI, IOC, CLR, XEC, CXO
The market is on the rise this morning. The Nasdaq has moved up 0.6%; the S&P 500 has climbed 0.4%; and the Dow has risen 0.3%. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.

The Energy sector (XLE) is down 0.9% on a good day for the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Lufkin Industries (Nasdaq:LUFK).81 billion-3.7%
Oil States International (NYSE:OIS).33 billion-3.4%
Clayton Williams Energy (Nasdaq:CWEI)3.1 million-3%
InterOil Corporation (NYSE:IOC).81 billion-2.7%
Continental Resources (NYSE:CLR) billion-2.7%
Cimarex (NYSE:XEC).13 billion-2.5%
Concho Resources (NYSE:CXO).13 billion-2.3%
Software Summary: Stock Screener

After a decline of 3.7%, Lufkin Industries (Nasdaq:LUFK) has hit a share price of $51.74. The company's volume for the day so far is 218,121 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for LUFK is 26.2, above the industry average of 14.56. 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. 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

Oil States International (NYSE:OIS) is currently trading at a share price of $76.37, a 3.4% decline. The company's volume is currently 319,494 shares for the day, consistent with its current three-month average. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The capitalization ratio for OIS is 33.7%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Clayton Williams Energy (Nasdaq:CWEI) has fallen 3% and is currently trading at $50.49 per share. So far today, 18,540 shares have changed hands. A stock's volume conveys how excited investors are about it. Understanding investment valuation ratios allows an investor to assess the true 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. CWEI has a P/B ratio of 1.6 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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

InterOil Corporation (NYSE:IOC) is down 2.7% to reach $76.65 per share. At 136,181 shares, the company's volume so far today is 0.2 times its current daily average. 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. 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for IOC is 2.79, which is relatively high. This could be a good sign if the share price increases. 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.

Slipping 2.7%, Continental Resources (NYSE:CLR) is currently trading at $75.22 per share. The company's volume is currently 282,838 shares. This is on pace to reach yesterday's trading volume of 619,747 shares. The trading volume for a stock indicates the level of investor interest. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CLR has a high debt ratio of 61.5%. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Currently trading at $58.12 per share, Cimarex (NYSE:XEC) has fallen 2.5%. The company's volume for the day so far is 169,360 shares, 0.2 times its average over the past three months. 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. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The debt-equity ratio of 23% is relatively low. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Concho Resources (NYSE:CXO) has decreased to $94.70 per share, a 2.3% fall. This morning, the company is trading a volume of 266,599 shares. Volume indicates the level of interest that investors have in a company at its current price. 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/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. CXO's PEG ratio is 1.16. 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.

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

comments powered by Disqus

Trading Center