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Deutsche and Other Big Movers In Financial on August 17, 2012
The Nasdaq has moved up 0.2%, the S&P 500 is unchanged and the Dow has declined 0.2% so far today. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.
These are the biggest movers in the Financial sector (XLF) (unchanged):
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Ares (Nasdaq:ARCC) is currently trading at a share price of $16.82, a 3.4% decline. The company's volume is currently 17 million shares for the day, above yesterday's volume of 1.3 million shares. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for ARCC is a high 9%. This could be a sign that the company is a "dividend trap" as companies with high dividends can be risky investments. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Guide To Stock-Picking Strategies: Income Investing
Rising 3%, Credicorp Ltd (NYSE:BAP) is currently trading at $117.55 per share. The company's volume for the morning is 212,166 shares. This is 0.6 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. The P/S ratio for BAP is 2.66, 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. 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.
Deutsche (NYSE:DB) is at $32.84 per share after an increase of 2.6%. The company's volume for the day so far is 707,226 shares, in keeping with its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. DB has a D/E ratio of 401%, which is relatively high. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After a decline of 2.4%, Texas Pacific (NYSE:TPL) has hit a share price of $58.48. So far today, 5,858 shares have changed hands. 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. 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. TPL's stock is trading for more than its book value with a P/B ratio of 26.58. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Cash America International (NYSE:CSH) is down 2% to reach $39.11 per share. So far today, the company's volume is 73,561 shares, which is likely to result in less activity than yesterday's volume of 198,925 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CSH has a capitalization ratio of 31%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
Slipping 1.7%, First Cash Financial Services (Nasdaq:FCFS) is currently trading at $41.72 per share. The company's volume for the day so far is 34,151 shares. This is 0.3 times its average daily volume. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. P/E ratio for FCFS is 17.0. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
After an increase of 1.5%, Comerica (NYSE:CMA) has reached a current price of $31.35. At 551,046 shares, the company's volume so far today is in keeping with the average volume over the past three months. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. CMA's PEG ratio of 0.96 is in line 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
These are the biggest movers in the Financial sector (XLF) (unchanged):
| Company | Market Cap | Percentage Change |
| Ares (Nasdaq:ARCC) | $3.87 billion | -3.4% |
| Credicorp Ltd (NYSE:BAP) | $9.1 billion | +3% |
| Deutsche (NYSE:DB) | $28.78 billion | +2.6% |
| Texas Pacific (NYSE:TPL) | $537.6 million | -2.4% |
| Cash America International (NYSE:CSH) | $1.17 billion | -2% |
| First Cash Financial Services (Nasdaq:FCFS) | $1.21 billion | -1.7% |
| Comerica (NYSE:CMA) | $5.98 billion | +1.5% |
Ares (Nasdaq:ARCC) is currently trading at a share price of $16.82, a 3.4% decline. The company's volume is currently 17 million shares for the day, above yesterday's volume of 1.3 million shares. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for ARCC is a high 9%. This could be a sign that the company is a "dividend trap" as companies with high dividends can be risky investments. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Guide To Stock-Picking Strategies: Income Investing
Rising 3%, Credicorp Ltd (NYSE:BAP) is currently trading at $117.55 per share. The company's volume for the morning is 212,166 shares. This is 0.6 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. The P/S ratio for BAP is 2.66, 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. 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.
Deutsche (NYSE:DB) is at $32.84 per share after an increase of 2.6%. The company's volume for the day so far is 707,226 shares, in keeping with its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. DB has a D/E ratio of 401%, which is relatively high. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
After a decline of 2.4%, Texas Pacific (NYSE:TPL) has hit a share price of $58.48. So far today, 5,858 shares have changed hands. 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. 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. TPL's stock is trading for more than its book value with a P/B ratio of 26.58. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Cash America International (NYSE:CSH) is down 2% to reach $39.11 per share. So far today, the company's volume is 73,561 shares, which is likely to result in less activity than yesterday's volume of 198,925 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CSH has a capitalization ratio of 31%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.
Slipping 1.7%, First Cash Financial Services (Nasdaq:FCFS) is currently trading at $41.72 per share. The company's volume for the day so far is 34,151 shares. This is 0.3 times its average daily volume. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. P/E ratio for FCFS is 17.0. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
After an increase of 1.5%, Comerica (NYSE:CMA) has reached a current price of $31.35. At 551,046 shares, the company's volume so far today is in keeping with the average volume over the past three months. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. CMA's PEG ratio of 0.96 is in line 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
by
Investopedia Staff
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