Filed Under: ,
Tickers in this Article: DY, GTLS, ACM, SXI, GVA, KUB, DE
The market is having a bad day so far: the Nasdaq has decreased 0.1%; the S&P 500 is down 0.1%; and the Dow has fallen 0.1%. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.

The Capital Goods sector (XLI) is down 0.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Dycom Industries (NYSE:DY)$614.5 million+2.6%
Chart Industries (Nasdaq:GTLS)$2.13 billion-2.2%
AECOM (NYSE:ACM)$2.16 billion+2.1%
Standex (NYSE:SXI)$558 million+1.9%
Granite Construction (NYSE:GVA)$1.07 billion+1.4%
Kubota Corporation (NYSE:KUB)$11.81 billion+1.4%
Deere (NYSE:DE)$29.94 billion-1.3%
Beginner's Guide To Stockcharts.com

Dycom Industries (NYSE:DY) has moved up 2.6% and is currently trading at $18.75 per share. The company's volume is currently 146,744 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. DY has a PEG ratio of 1.22, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Falling 2.2%, Chart Industries (Nasdaq:GTLS) is currently at a share price of $69.70. With 107,086 shares changing hands so far today, the company's volume is 0.3 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. 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/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. GTLS has a P/B ratio of 3.21 which 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. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Rising 2.1%, AECOM (NYSE:ACM) is currently trading at $19.47 per share. The company's volume for the day so far is 322,642 shares. 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. 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. 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. The P/E ratio for ACM is 8.6, below the industry average of 12.0. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

After an increase of 1.9%, Standex (NYSE:SXI) has reached a current price of $45.02. So far today, the company's volume is 58,115 shares, 1.6 times the average daily volume. The trading volume for a stock indicates the level of investor interest. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for SXI is a low 43.4%. 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.

Granite Construction (NYSE:GVA) is at $28.13 per share after an increase of 1.4%. The company's volume for the day so far is 119,589 shares. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. GVA's P/S ratio of 0.48 is fairly low. 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. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Kubota Corporation (NYSE:KUB) has risen 1.4% and is currently trading at $47.66 per share. The company's volume is currently 5,914 shares for the day, 0.2 times its average over the past three months. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. KUB's capitalization ratio is 23.4%, which is relatively low. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

Deere (NYSE:DE) has decreased to $74.26 per share, a 1.3% fall. The company is currently trading a volume of 2.9 million shares. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for DE is 422%. This shows that the company's assets are financed primarily through debt. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

comments powered by Disqus

Trading Center