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Energy Stocks Making Big Moves on July 19, 2012
The Nasdaq is trading up 1.1%, the S&P 500 has climbed 0.3% and the Dow has increased 0.3%, marking a bad morning for the market. 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.
Underperforming the market overall, the Energy sector (XLE) is up 0.1%, and these are its current biggest movers:
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Oasis Petroleum (NYSE:OAS) is currently trading at $27.98 per share, a 4.7% increase. At 453,610 shares, the company's volume so far today is while it was 831,973 shares yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. OAS' gross profit margin of 90% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Relative to its gross profit margin, the company has a high net profit margin of 25%. A high net profit margin means a company is able to control its costs that buy goods and services at prices significantly higher than it costs to produce or provide them. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. Operating profit margin for OAS is 42%.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for OAS is 6.99, 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. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Continental Resources (NYSE:CLR) has risen 4.1% to hit a current price of $75.43 per share. So far today, the company's volume is 916,088 shares. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. CLR has a relatively high gross profit margin of 87.4%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. CLR has an operating profit margin of 34.3% and a net profit margin of 33.2%, both high compared to its gross profit margin.
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. CLR has a high debt ratio of 63.6%. 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.
Slipping 3.9%, HollyFrontier (NYSE:HFC) is currently trading at $36.27 per share. So far today, the company's volume is 1.3 million shares, 0.6 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. HFC has a low gross profit margin of 12.8%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. HFC has an operating profit margin of 8.5% and a net profit margin of 6.7%, both low compared to its gross profit margin.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a 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 debt-equity ratio of 25% is relatively low. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Increasing 3.7%, Pioneer Natural Res (NYSE:PXD) is trading at $93.26 per share. The company's volume for the day so far is 1.7 million shares. This is in keeping with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for PXD is 74.3%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. PXD's operating profit margin is 37.2%. Net profit margins are those generated from all phases of a business, including taxes. The company's net profit margin is 30.2%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. The P/E ratio for PXD is 15.5, below the industry average of 17.94. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Find P/E And PEG Ratios
Baytex Energy Corp (NYSE:BTE) is at $43.14 per share after an increase of 3.5%. This morning, 146,612 shares have been traded, below yesterday's volume of 269,192 shares. The trading volume for a stock indicates the level of investor interest. Margin analysis is a great way to understand the profitability of companies. BTE has a gross profit margin of 48.6%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. BTE has an operating profit margin of 20.9%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net profit margin for the company is 19.3%.
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. BTE's capitalization ratio is 34.1%. 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.
Diamond Offshore Drilling (NYSE:DO) is up 3.4% to reach a current price of $66.02 per share. The company is currently trading a volume of 1.2 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. DO's gross profit margin is 49.9%. Compared with its gross profit margin, DO's operating profit margin of 34.5% and net profit margin of 27.3% are low.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for DO is consistent with the industry average at 0.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
After an increase of 2.9%, ENSCO (NYSE:ESV) has reached a current price of $51.35. With 1.8 million shares changing hands so far today, the company's volume is 0.8 times its average over the past three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. ESV has a gross profit margin of 47%. ESV's operating margin of 32% and net margin of 23% are low relative to its gross margin.
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. 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. ESV's P/B ratio of 1.07 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.
Underperforming the market overall, the Energy sector (XLE) is up 0.1%, and these are its current biggest movers:
| Company | Market Cap | Percentage Change |
| Oasis Petroleum Inc. (NYSE:OAS) | $2.49 billion | +4.7% |
| Continental Resources, Inc. (NYSE:CLR) | $13.12 billion | +4.1% |
| HollyFrontier Corp (NYSE:HFC) | $7.8 billion | -3.9% |
| Pioneer Natural Res (NYSE:PXD) | $11.06 billion | +3.7% |
| Baytex Energy Corp (USA) (NYSE:BTE) | $4.99 billion | +3.5% |
| Diamond Offshore Drilling, Inc. (NYSE:DO) | $8.88 billion | +3.4% |
| ENSCO PLC (NYSE:ESV) | $11.5 billion | +2.9% |
Oasis Petroleum (NYSE:OAS) is currently trading at $27.98 per share, a 4.7% increase. At 453,610 shares, the company's volume so far today is while it was 831,973 shares yesterday. Volume is used to evaluate how meaningful the price movement of a stock is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. OAS' gross profit margin of 90% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Relative to its gross profit margin, the company has a high net profit margin of 25%. A high net profit margin means a company is able to control its costs that buy goods and services at prices significantly higher than it costs to produce or provide them. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. Operating profit margin for OAS is 42%.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for OAS is 6.99, 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. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Continental Resources (NYSE:CLR) has risen 4.1% to hit a current price of $75.43 per share. So far today, the company's volume is 916,088 shares. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. CLR has a relatively high gross profit margin of 87.4%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. CLR has an operating profit margin of 34.3% and a net profit margin of 33.2%, both high compared to its gross profit margin.
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. CLR has a high debt ratio of 63.6%. 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.
Slipping 3.9%, HollyFrontier (NYSE:HFC) is currently trading at $36.27 per share. So far today, the company's volume is 1.3 million shares, 0.6 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. HFC has a low gross profit margin of 12.8%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. HFC has an operating profit margin of 8.5% and a net profit margin of 6.7%, both low compared to its gross profit margin.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a 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 debt-equity ratio of 25% is relatively low. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Increasing 3.7%, Pioneer Natural Res (NYSE:PXD) is trading at $93.26 per share. The company's volume for the day so far is 1.7 million shares. This is in keeping with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for PXD is 74.3%. As with other margin ratios, the operating margin is a percentage, which allows for more standardized comparison across time and among different companies of different sizes. PXD's operating profit margin is 37.2%. Net profit margins are those generated from all phases of a business, including taxes. The company's net profit margin is 30.2%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. The P/E ratio for PXD is 15.5, below the industry average of 17.94. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Find P/E And PEG Ratios
Baytex Energy Corp (NYSE:BTE) is at $43.14 per share after an increase of 3.5%. This morning, 146,612 shares have been traded, below yesterday's volume of 269,192 shares. The trading volume for a stock indicates the level of investor interest. Margin analysis is a great way to understand the profitability of companies. BTE has a gross profit margin of 48.6%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. BTE has an operating profit margin of 20.9%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Net profit margin for the company is 19.3%.
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. BTE's capitalization ratio is 34.1%. 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.
Diamond Offshore Drilling (NYSE:DO) is up 3.4% to reach a current price of $66.02 per share. The company is currently trading a volume of 1.2 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. DO's gross profit margin is 49.9%. Compared with its gross profit margin, DO's operating profit margin of 34.5% and net profit margin of 27.3% are low.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for DO is consistent with the industry average at 0.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
After an increase of 2.9%, ENSCO (NYSE:ESV) has reached a current price of $51.35. With 1.8 million shares changing hands so far today, the company's volume is 0.8 times its average over the past three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. ESV has a gross profit margin of 47%. ESV's operating margin of 32% and net margin of 23% are low relative to its gross margin.
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. 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. ESV's P/B ratio of 1.07 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.
by
Investopedia Staff
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