Filed Under: ,
Tickers in this Article: BTU, RES, SM, COG, FTI, CLR, LUFK
Currently, the Nasdaq has decreased 0.8%, the S&P 500 is trading down 0.2% and the Dow is trading up 0.4%. 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) has risen 0.6% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
Peabody Energy (NYSE:BTU)$5.6 billion-6.7%
RPC, Inc. (NYSE:RES)$2.68 billion+5.9%
SM Energy Co. (NYSE:SM)$3.1 billion-3.4%
Cabot Oil & Gas Corporation (NYSE:COG)$8.29 billion-3.3%
FMC Technologies (NYSE:FTI)$9.63 billion+3.1%
Continental Resources, Inc. (NYSE:CLR)$12.62 billion-2.8%
Lufkin Industries, Inc. (Nasdaq:LUFK)$1.94 billion-2.5%
Beginner's Guide To FXCM And Trading Station

Peabody Energy (NYSE:BTU) is trading at $19.18 per share, down 6.7%. The company's volume is currently 9.3 million shares for the day, consistent with the volume from yesterday while it was 21.6 million shares yesterday. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. BTU has a D/E ratio of 116%, which is relatively high. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

RPC (NYSE:RES) is currently trading at $12.93 per share, a 5.9% increase. The company's volume for the day so far is 1.5 million shares. This is 1.9 times its average volume 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for RES is 8.6, above the industry average of 2.56. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio

SM (NYSE:SM) is currently trading at a share price of $46.62, a 3.4% decline. The company is currently trading a volume of 363,997 shares. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. SM's PEG ratio is 0.72. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Cabot Oil & Gas (NYSE:COG) has decreased to $38.20 per share, a 3.3% fall. At 2.9 million shares, the company's volume so far today is 0.6 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for COG is 3.77, indicating that the stock is trading for more than its book value. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio

After rising 3.1%, FMC (NYSE:FTI) is currently trading at a share price of $41.50. The company's volume for the day so far is 2.2 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that 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. A price/sales ratio is derived by dividing stock market price by company sales. FTI has a high P/S ratio of 2.23. This could be a good sign if the share price increases. 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.

At $67.74, Continental Resources (NYSE:CLR) has slipped 2.8%. The company's volume is currently 296,638 shares for the day, 0.2 times its average over the past 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. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CLR's debt ratio of 63.6% is fairly high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Lufkin Industries (Nasdaq:LUFK) is down 2.5% to reach $56.25 per share. So far today, the company's volume is 277,108 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. 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. LUFK has a low capitalization ratio of 28.1%. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

comments powered by Disqus

Trading Center