The market has been slipping so far today. The Nasdaq has slipped 0.7%; the S&P 500 has decreased 0.7%; and the Dow is trading down 0.8%. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.
The Energy sector (XLE) is currently ahead of the overall market, down only 0.1%, and its biggest movers are currently:
|Company||Market Cap||Percentage Change|
|Baker Hughes (NYSE:BHI)||$18.31 billion||+8.6%|
|Superior Energy Services, Inc. (NYSE:SPN)||$3.34 billion||+5.6%|
|Lufkin Industries, Inc. (Nasdaq:LUFK)||$1.88 billion||+4.3%|
|Eni S.p.A. (ADR) (NYSE:E)||$74.92 billion||-4.1%|
|Tesoro Logistics LP (NYSE:TLLP)||$552.3 million||+3.3%|
|Noble (NYSE:NE)||$8.98 billion||+2.8%|
|Halliburton (NYSE:HAL)||$27.88 billion||+2.7%|
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Increasing 8.6%, Baker (NYSE:BHI) is trading at $45.32 per share. The company's volume for the day so far is 12.9 million shares. Yesterday, volume was only 7.3 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). BHI's P/E ratio of 10.6 is under the industry average of 25.91. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Can Investors Trust the P/E Ratio?
Rising 5.6%, Superior Energy Services (NYSE:SPN) is currently trading at $22.36 per share. This morning, the company is trading a volume of 1.5 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. SPN's stock is trading for less than its book value as can be seen from it's P/B value of 0.9. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Lufkin Industries (Nasdaq:LUFK) has moved up 4.3% and is currently trading at $58.22 per share. So far today, the company's volume is 309,579 shares, 0.9 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. LUFK has a dividend yield of 0.9%, which is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Dividend Yield For The Downturn
Currently trading at $39.68 per share, Eni S.p.A (NYSE:E) has fallen 4.1%. The company's volume for the morning is 358,993 shares. This is 0.9 times the current daily average. If a stock price moves on high volume, this means that the change is a significant one. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. The D/E ratio for E is 51%. 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.
Tesoro (NYSE:TLLP) has risen 3.3% and is currently trading at $36.90 per share. So far today, 14,383 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. 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 debt ratio shows the proportion of assets that a company is financing through debt. TLLP's debt ratio of 34.9% is on the low side. A low debt ratio means the company has more available cash flow. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
After rising 2.8%, Noble (NYSE:NE) is currently trading at a share price of $36.58. The company's volume for the day so far is 2.2 million shares. A stock's volume conveys how excited investors are about it. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A price/sales ratio is derived by dividing stock market price by company sales. NE has a high P/S ratio of 3.25. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Halliburton (NYSE:HAL) is currently trading at $31.02 per share, a 2.7% increase. With 11.5 million shares changing hands so far today, the company's volume is 0.9 times its average over the past three months. 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. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. HAL has a fairly low capitalization ratio of 25.8%. Investors generally consider a company with low debt and high equity levels is a good quality investment. 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.
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.