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Tickers in this Article: CPHD, SNDK, ATHN, BMI, PANL, N, MLNX
This morning's trading has marked a bad day for the market so far. The Nasdaq has declined 0.7%; the S&P 500 has declined 0.7%; and the Dow has fallen 0.8%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

The Technology sector (XLK) is currently ahead of the overall market, down only 0.5%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Cepheid (Nasdaq:CPHD).87 billion-21%
SanDisk (Nasdaq:SNDK).55 billion+13.4%
athenahealth, Inc (Nasdaq:ATHN).12 billion+9.3%
Badger Meter, Inc. (NYSE:BMI)2.9 million-8.2%
Universal Display Corporation (Nasdaq:PANL).75 billion-8.2%
NetSuite Inc. (NYSE:N).76 billion-6.2%
Mellanox Technologies, Ltd. (Nasdaq:MLNX).73 billion-5.7%
Broker Summary: E-Trade Financial

Shares of Cepheid (Nasdaq:CPHD) are currently trading at $34.56, a steep decline of 21%. So far today, 4.9 million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. CPHD's P/B ratio of 9.79 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

SanDisk (Nasdaq:SNDK) is trading at $39.77 per share, a significant rise of 13.4%. The company's volume is currently 13.6 million shares for the day, 2.6 times the average daily volume. The trading volume for a stock indicates the level of investor interest. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. The P/S ratio for SNDK is 2.16, 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.

athenahealth (Nasdaq:ATHN) is up 9.3% to reach a current price of $95.32 per share. So far today, the company's volume is 1.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio shows the proportion of assets that a company is financing through debt. ATHN has a debt ratio of 27.8%, which is fairly low. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

After a decline of 8.2%, Badger Meter (NYSE:BMI) has hit a share price of $36.24. At 239,852 shares, the company's volume so far today is 2.8 times its current three-month 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. BMI's debt-equity ratio of 38% is on the low end. 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 is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Currently trading at $34.60 per share, Universal (Nasdaq:PANL) has fallen 8.2%. The company's volume is currently 578,507 shares. Volume indicates the level of interest that investors have in a company at its current price. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. PANL's P/E ratio is 190.3. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?

Slipping 6.2%, NetSuite (NYSE:N) is currently trading at $50.26 per share. At 388,785 shares, the company's volume so far today is 0.6 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. N has a fairly low capitalization ratio of 1.2%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Mellanox (Nasdaq:MLNX) is down 5.7% to reach $88.58 per share. This morning, the company is trading a volume of 946,505 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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/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. PEG ratio for MLNX is 4.55. 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 No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.

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