The morning has been bad for the market. The Nasdaq is trading down 0.1%; the S&P 500 is down 0.2%; and the Dow has slipped 0.2%.
The Services sector (IYC) is currently lagging behind the overall market, down 0.1%, and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|Millennial Media, Inc. (NYSE:MM)||$775.3 million||+19.8%|
|Brinker International, Inc. (NYSE:EAT)||$2.45 billion||+7.5%|
|Dillard\'s, Inc. (NYSE:DDS)||$3.43 billion||+6.4%|
|Corrections Corp Of America (NYSE:CXW)||$3.09 billion||+5.6%|
|CONN\'S, Inc. (Nasdaq:CONN)||$678.1 million||+5.2%|
|Yelp Inc (NYSE:YELP)||$1.62 billion||+5.1%|
|Kenexa Corporation (NYSE:KNXA)||$824.4 million||+4.5%|
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Millennial Media (NYSE:MM) is currently at $12.21 per share after a dramatic increase of 19.8%. At 1.4 million shares, the company's volume so far today is 5.1 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio is calculated by dividing total liabilities by total assets. MM has a debt ratio of 183.4%, which is on the high side. 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.
Brinker International (NYSE:EAT) has moved up 7.5% and is currently trading at $35 per share. The company's volume for the day so far is 2.5 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. 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. EAT has a D/E ratio of 174%, which is relatively high. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
After rising 6.4%, Dillard's (NYSE:DDS) is currently trading at a share price of $74.80. With 942,404 shares changing hands so far today, the company's volume is 1.7 times its current three-month average. A stock's volume conveys how excited investors are about it. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. DDS has a fairly low capitalization ratio of 27.7%. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Corrections Corp Of (NYSE:CXW) is up 5.6% to reach a current price of $32.67 per share. The company's volume is currently 1.9 million shares. Yesterday, volume was only 1.8 million shares. Volume is an important indicator because it indicates how significant a price shift is. 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. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. CXW has a dividend yield of 2.6%. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing
CONN'S (Nasdaq:CONN) is currently trading at $21.97 per share, a 5.2% increase. At 225,770 shares, the company's volume so far today is in line with the current daily average. 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 price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. CONN's PEG ratio is 20.56. 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.
Yelp (NYSE:YELP) has risen 5.1% and is currently trading at $27.81 per share. So far today, 927,733 shares have changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios include 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/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. YELP's stock is trading for more than its book value with a P/B ratio of 12.09. This may be a sign that the company is overvalued. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: How Buybacks Warps The Price-To-Book Ratio
Kenexa (NYSE:KNXA) has risen 4.5% and is currently trading at $31.52 per share. The company's volume is currently 308,102 shares for the day, 0.8 times the 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 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/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. KNXA has a high P/S ratio of 2.83. This could be a good sign if the share price increases. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.