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Tickers in this Article: HNP, ETE, CPL, MWE, SBS, AEE, TRGP
The market is currently up, with the Nasdaq climbing 0.8%, the S&P 500 rising 0.3% and the Dow up 0.3%. 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 relatively unchanged on a good day for the market overall. So far, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
Huaneng Power International, Inc. (ADR) (NYSE:HNP)$9.88 billion+1.6%
Energy Transfer Equity, L.P. (NYSE:ETE)$11.69 billion+1.6%
CPFL Energia S.A. (ADR) (NYSE:CPL)$11.38 billion-1.6%
Markwest Energy Partners LP (NYSE:MWE)$5.61 billion+1.4%
Companhia de Saneamento Basico (ADR) (NYSE:SBS)$10.06 billion+1.1%
Ameren (NYSE:AEE)$8.33 billion-1.1%
Targa Resources Corp (NYSE:TRGP)$1.85 billion-0.9%
Broker Summary: TD Ameritrade Thinkorswim

After an increase of 1.6%, Huaneng Power International, Inc (NYSE:HNP) has reached a current price of $28.56. So far today, 33,780 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. Volume is used to evaluate how meaningful the price movement of a stock 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. 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. HNP has a high capitalization ratio of 67.4%. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's 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.

Energy Transfer Equity (NYSE:ETE) is currently trading at $42.41 per share, a 1.6% increase. At 345,482 shares, the company's volume so far today is 0.4 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. ETE has a high debt ratio of 93.1%. 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.

After a decline of 1.6%, CPFL Energia S.A (NYSE:CPL) has hit a share price of $23.28. So far today, 154,171 shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. CPL's stock is trading for more than its book value with a P/B ratio of 3.24. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: How Buybacks Warps The Price-To-Book Ratio

Markwest Energy (NYSE:MWE) has moved up 1.4% and is currently trading at $51.37 per share. With 917,796 shares changing hands so far today, the company's volume is 0.8 times its current three-month average. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. Dividend yield for MWE is 6.3%. 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: Dividend Yield For The Downturn

Companhia de Saneamento Basico (NYSE:SBS) has risen 1.1% and is currently trading at $89.35 per share. The company's volume for the day so far is 125,968 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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 SBS is 1.58, 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.

Ameren (NYSE:AEE) is trading at $33.95 per share, down 1.1%. The company's volume is currently 693,183 shares for the day, in line with the current daily average. 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 company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 15.41, AEE's P/E ratio of 70.3 is quite high. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: The P/E Ratio: A Good Market-Timing Indicator

Targa (NYSE:TRGP) has fallen 0.9% and is currently trading at $43.09 per share. So far today, the company's volume is 101,509 shares. 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. 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 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. TRGP's D/E ratio of 1143% is on the high side. 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.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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