The market has been slipping so far today. The Nasdaq has slipped 0.2%; the S&P 500 has decreased 0.2%; and the Dow is trading down 0.2%. 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 lagging behind the overall market, down 0.3%, and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|Delek US Holdings, Inc. (NYSE:DK)||$1.52 billion||-9.4%|
|Natural Resource Partners LP (NYSE:NRP)||$2.11 billion||+4.6%|
|Sandridge Mississippian Trust I (NYSE:SDT)||$815.9 million||-4.3%|
|Gulfport Energy Corporation (Nasdaq:GPOR)||$1.48 billion||-3.5%|
|Cabot Oil & Gas Corporation (NYSE:COG)||$9.13 billion||-2.7%|
|AmeriGas Partners, L.P. (NYSE:APU)||$3.71 billion||+2.1%|
|SM Energy Co. (NYSE:SM)||$3.08 billion||-2.1%|
Broker Summary: TD Ameritrade Thinkorswim
Falling 9.4%, Delek US Holdings (NYSE:DK) is currently at a share price of $23.60. At 1.1 million shares, the company's volume so far today is. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for DK is 69.5%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. 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.
Natural Resource (NYSE:NRP) has risen 4.6% to hit a current price of $21.52 per share. So far today, 196,448 shares have changed hands. A stock's volume conveys how excited investors are about it. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. NRP's stock is trading for more than its book value with a P/B ratio of 3.62. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
Currently trading at $27.87 per share, Sandridge Mississippian Trust (NYSE:SDT) has fallen 4.3%. So far today, the company's volume is 204,542 shares, one times its average over the past three months. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. Dividend yield measures the income that a stock will generate for an investor. Dividend yield for SDT is 10%, which is fairly high. This could be a sign that the company is a "dividend trap" as companies with high dividends can be risky investments. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Due Diligence On Dividends
After a decline of 3.5%, Gulfport (Nasdaq:GPOR) has hit a share price of $25.68. So far this morning, 744,647 shares have changed hands. This is 0.6 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for GPOR is 6.56, 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. 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.
Cabot Oil & Gas (NYSE:COG) is currently trading at a share price of $42.32, a 2.7% decline. The company's volume is currently 778,631 shares for the day, on pace to finish the day below yesterday's volume of three million shares. 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/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). The P/E ratio for COG is 81.5, above the industry average of 21.52. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Understanding The P/E Ratio
AmeriGas Partners (NYSE:APU) has increased to a share price of $41.08, a 2.1% rise. The company is currently trading a volume of 43,857 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. APU's D/E ratio of 136% is on the high side. This shows that the company's assets are financed primarily through debt. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
At $46.85, SM (NYSE:SM) has slipped 2.1%. The company's volume is currently 378,465 shares for the day, 0.2 times the average volume over the last three months. The trading volume for a stock indicates the level of investor 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. 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. SM's capitalization ratio is 43.2%. 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 On any given day, a particular stock may see positive or negative change in its share price. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.