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Energy Transfer Equity and Other Big Movers In Utilities on October 5, 2012
The Nasdaq is trading up 0.2%, the S&P 500 has increased 0.5% and the Dow has climbed 0.5% on a good day for the market so far. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
The Utilities sector (XLU) is up 0.4%, outperforming the market overall. The biggest movers in the sector so far are:
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Rising 4.1%, Energy Transfer (NYSE:ETP) is currently trading at $43.34 per share. At 4.2 million shares, the company's volume so far today is 1.4 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ETP has a P/B ratio of 1.63 which shows that its share price is higher than its book value. 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: Using The Price-To-Book Ratio To Evaluate Companies
Energy Transfer Equity (NYSE:ETE) has risen 2.1% to hit a current price of $45.58 per share. The company's volume for the day so far is 705,373 shares. This is 1.2 times its average volume over the past three months. The trading volume for a stock indicates the level of investor interest. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. ETE's P/E ratio of 27.7 is above the industry average of 24.99. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?
Huaneng Power International, Inc (NYSE:HNP) has increased to a share price of $30.71, a 2% rise. This morning, the company is trading a volume of 40,139 shares. Volume is used to evaluate how meaningful the price movement of a stock 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. The price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. HNP has a PEG ratio of 5.99. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Increasing 1.5%, Southwest (NYSE:SWX) is trading at $44.74 per share. At 19,843 shares, the company's volume so far today is lighter than yesterday's volume of 138,150 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for SWX is 2.7%. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Due Diligence On Dividends
After rising 1.3%, Oneok (NYSE:OKE) is currently trading at a share price of $49.74. So far this morning, 170,967 shares have changed hands. This is 0.2 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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/sales ratio measures a company's stock market price by its revenues. OKE has a P/S ratio of 0.65, on the low end. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.
New Jersey (NYSE:NJR) has risen 1.2% and is currently trading at $46.26 per share. The company's volume is currently 30,950 shares for the day, 0.2 times the average volume over the last three months. 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. The debt ratio shows the proportion of assets that a company is financing through debt. NJR has a high debt ratio of 68.8%. 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.
American States (NYSE:AWR) is currently trading at $44.91 per share, a 1.1% increase. The company's volume for the day so far is 16,959 shares. 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. 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-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. AWR's D/E ratio is 80%. 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.
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
The Utilities sector (XLU) is up 0.4%, outperforming the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Energy Transfer (NYSE:ETP) | $10.22 billion | +4.1% |
| Energy Transfer Equity (NYSE:ETE) | $12.5 billion | +2.1% |
| Huaneng Power International, Inc (NYSE:HNP) | $10.58 billion | +2% |
| Southwest (NYSE:SWX) | $2.03 billion | +1.5% |
| Oneok (NYSE:OKE) | $10.07 billion | +1.3% |
| New Jersey (NYSE:NJR) | $1.9 billion | +1.2% |
| American States (NYSE:AWR) | $840.2 million | +1.1% |
Rising 4.1%, Energy Transfer (NYSE:ETP) is currently trading at $43.34 per share. At 4.2 million shares, the company's volume so far today is 1.4 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ETP has a P/B ratio of 1.63 which shows that its share price is higher than its book value. 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: Using The Price-To-Book Ratio To Evaluate Companies
Energy Transfer Equity (NYSE:ETE) has risen 2.1% to hit a current price of $45.58 per share. The company's volume for the day so far is 705,373 shares. This is 1.2 times its average volume over the past three months. The trading volume for a stock indicates the level of investor interest. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. ETE's P/E ratio of 27.7 is above the industry average of 24.99. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?
Huaneng Power International, Inc (NYSE:HNP) has increased to a share price of $30.71, a 2% rise. This morning, the company is trading a volume of 40,139 shares. Volume is used to evaluate how meaningful the price movement of a stock 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. The price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. HNP has a PEG ratio of 5.99. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
After rising 1.3%, Oneok (NYSE:OKE) is currently trading at a share price of $49.74. So far this morning, 170,967 shares have changed hands. This is 0.2 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. 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/sales ratio measures a company's stock market price by its revenues. OKE has a P/S ratio of 0.65, on the low end. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.
New Jersey (NYSE:NJR) has risen 1.2% and is currently trading at $46.26 per share. The company's volume is currently 30,950 shares for the day, 0.2 times the average volume over the last three months. 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. The debt ratio shows the proportion of assets that a company is financing through debt. NJR has a high debt ratio of 68.8%. 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.
American States (NYSE:AWR) is currently trading at $44.91 per share, a 1.1% increase. The company's volume for the day so far is 16,959 shares. 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. 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-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. AWR's D/E ratio is 80%. 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.
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. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.
by
Investopedia Staff
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