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Tickers in this Article: NRGY, BRY, COG, RES, SM, PXD, RRC
The market is having a bad day so far. The Nasdaq has declined 0.2%; the S&P 500 has fallen 0.3%; and the Dow has slipped 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 0.6%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Inergy (NYSE:NRGY)$2.6 billion+4.5%
Berry Petroleum (NYSE:BRY)$2.15 billion-3.2%
Cabot Oil & Gas (NYSE:COG)$9.03 billion-3%
RPC (NYSE:RES)$2.82 billion+2.9%
SM (NYSE:SM)$3.18 billion-2.7%
Pioneer Natural Res (NYSE:PXD)$12.36 billion-2.2%
Range (NYSE:RRC)$11.32 billion-2%
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Inergy (NYSE:NRGY) has risen 4.5% to hit a current price of $20.60 per share. So far today, the company's volume is 274,607 shares. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. NRGY has a D/E ratio of 158%, which is relatively high. 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.

After a decline of 3.2%, Berry Petroleum (NYSE:BRY) has hit a share price of $38.40. So far today, the company's volume is 162,210 shares, 0.3 times its current three-month average. Volume is an important indicator because it indicates how significant a price shift is. 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 debt ratio shows the proportion of assets that a company is financing through debt. BRY has a high debt ratio of 68.2%. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Cabot Oil & Gas (NYSE:COG) is currently trading at a share price of $41.68, a 3% decline. The company is trading at a volume of 507,108 shares. This is on pace to fall short of yesterday's volume of 2.6 million shares. A stock's volume conveys how excited investors are about it. 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 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 COG is 81.5, above the industry average of 14.62. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios

Increasing 2.9%, RPC (NYSE:RES) is trading at $13.23 per share. The company's volume is currently 467,278 shares for the day, 0.4 times its current daily average. If a stock price moves on high volume, this means that the change is a significant one. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. RES' capitalization ratio is 15.9%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

At $47.40, SM (NYSE:SM) has slipped 2.7%. So far today, 246,510 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. 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, 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. SM's P/B ratio of 2.02 shows that its share price is higher 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: Using The Price-To-Book Ratio To Evaluate Companies

Pioneer Natural Res (NYSE:PXD) has decreased to $98.23 per share, a 2.2% fall. At 359,064 shares, the company's volume so far today is 0.3 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. PXD's dividend yield of 0.1% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Investment Valuation Ratios: Dividend Yield

Range (NYSE:RRC) is down 2% to reach $68.24 per share. So far today, the company's volume is 565,641 shares. This is a sign that there will be less trading activity than there was yesterday. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for RRC is a high 7.67. 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.

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.

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