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Edwards Lifesciences Among Healthcare's Biggest Movers on September 24, 2012
The Nasdaq has fallen 0.7%, the S&P 500 has fallen 0.2% and the Dow has declined 0.2% on a bad morning for the market. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
The Healthcare sector (XLV) is relatively unchanged on a bad day for the market overall. The current biggest movers in the sector are:
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VIVUS (Nasdaq:VVUS) is down 5.6% to reach $19.82 per share. So far today, the company's volume is 2.2 million shares, 0.8 times its average over the past three months. If a stock price moves on high volume, this means that the change is a significant one. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. VVUS' stock is trading for more than its book value with a P/B ratio of 6.48. 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: Investment Valuation Ratios: Price/Book Value Ratio
At $18.87, Incyte (Nasdaq:INCY) has slipped 5.4%. The company's volume for the day so far is 657,416 shares. This is on pace to fall short of yesterday's volume of 2.7 million shares. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. 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 debt ratio is calculated by dividing total liabilities by total assets. INCY has a debt ratio of 169.6%, 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.
Onyx Pharmaceuticals (Nasdaq:ONXX) is currently trading at $85.79 per share, a 2.2% increase. At 677,793 shares, the company's volume so far today is consistent with its current daily average. Volume is used to evaluate how meaningful the price movement of a stock 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. A price/sales ratio is derived by dividing stock market price by company sales. ONXX has a high P/S ratio of 9.43. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Increasing 2.2%, Cantel (NYSE:CMN) is trading at $28.31 per share. So far today, the company's volume is 57,538 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. A company's investment value can be 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CMN's capitalization ratio is 25.4%, 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. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Currently trading at $48.84 per share, Cubist Pharmaceuticals (Nasdaq:CBST) has fallen 2%. The company's volume is currently 351,227 shares for the day, in keeping with its current three-month average. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. PEG ratio for CBST is consistent with the industry average at 1.23. 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.
Abaxis (Nasdaq:ABAX) is up 1.7% to reach a current price of $37.88 per share. The company's volume is currently 24,950 shares. This is a sign that there will be less trading activity than there was yesterday. 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. 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. ABAX has a P/B ratio of 5.05 which shows that its share price is higher than its book value. 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: Using The Price-To-Book Ratio To Evaluate Companies
Edwards Lifesciences (NYSE:EW) has fallen 1.4% and is currently trading at $104.35 per share. At 181,831 shares, the company's volume so far today is 0.2 times the 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). P/E ratio for EW is 50.9. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Healthcare sector (XLV) is relatively unchanged on a bad day for the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| VIVUS (Nasdaq:VVUS) | $2.11 billion | -5.6% |
| Incyte (Nasdaq:INCY) | $2.61 billion | -5.4% |
| Onyx Pharmaceuticals (Nasdaq:ONXX) | $5.47 billion | +2.2% |
| Cantel (NYSE:CMN) | $748.1 million | +2.2% |
| Cubist Pharmaceuticals (Nasdaq:CBST) | $3.18 billion | -2% |
| Abaxis (Nasdaq:ABAX) | $816.5 million | +1.7% |
| Edwards Lifesciences (NYSE:EW) | $12.25 billion | -1.4% |
VIVUS (Nasdaq:VVUS) is down 5.6% to reach $19.82 per share. So far today, the company's volume is 2.2 million shares, 0.8 times its average over the past three months. If a stock price moves on high volume, this means that the change is a significant one. 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. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. VVUS' stock is trading for more than its book value with a P/B ratio of 6.48. 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: Investment Valuation Ratios: Price/Book Value Ratio
At $18.87, Incyte (Nasdaq:INCY) has slipped 5.4%. The company's volume for the day so far is 657,416 shares. This is on pace to fall short of yesterday's volume of 2.7 million shares. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. 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 debt ratio is calculated by dividing total liabilities by total assets. INCY has a debt ratio of 169.6%, 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.
Onyx Pharmaceuticals (Nasdaq:ONXX) is currently trading at $85.79 per share, a 2.2% increase. At 677,793 shares, the company's volume so far today is consistent with its current daily average. Volume is used to evaluate how meaningful the price movement of a stock 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. A price/sales ratio is derived by dividing stock market price by company sales. ONXX has a high P/S ratio of 9.43. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Increasing 2.2%, Cantel (NYSE:CMN) is trading at $28.31 per share. So far today, the company's volume is 57,538 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. A company's investment value can be 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CMN's capitalization ratio is 25.4%, 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. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Currently trading at $48.84 per share, Cubist Pharmaceuticals (Nasdaq:CBST) has fallen 2%. The company's volume is currently 351,227 shares for the day, in keeping with its current three-month average. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. PEG ratio for CBST is consistent with the industry average at 1.23. 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.
Abaxis (Nasdaq:ABAX) is up 1.7% to reach a current price of $37.88 per share. The company's volume is currently 24,950 shares. This is a sign that there will be less trading activity than there was yesterday. 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. 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. ABAX has a P/B ratio of 5.05 which shows that its share price is higher than its book value. 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: Using The Price-To-Book Ratio To Evaluate Companies
Edwards Lifesciences (NYSE:EW) has fallen 1.4% and is currently trading at $104.35 per share. At 181,831 shares, the company's volume so far today is 0.2 times the 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). P/E ratio for EW is 50.9. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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