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Tickers in this Article: IHS, PXP, WLT, UNT, SPH, E, LUFK
After the morning's trading, the Nasdaq has remained steady, the S&P 500 is down 0.3% and the Dow has been relatively flat. 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) has fallen 0.3% despite little change in the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
IHS (NYSE:IHS)$7.63 billion-4.4%
Plains Exploration & Production (NYSE:PXP)$4.9 billion+2.9%
Walter Energy (NYSE:WLT)$2.33 billion-2.6%
Unit (NYSE:UNT)$2.18 billion+2.3%
Suburban Propane Partners (NYSE:SPH)$1.91 billion+2.2%
Eni S.p.A (NYSE:E)$86.64 billion+2.2%
Lufkin Industries (Nasdaq:LUFK)$2.02 billion+1.8%
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IHS (NYSE:IHS) is trading at $90.56 per share, down 4.4%. The company's volume is currently 478,936 shares for the day, two times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. A company's value as an investment is more easily 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. 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. IHS' P/B ratio of 4.03 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. 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: Investment Valuation Ratios: Price/Book Value Ratio

Plains Exploration & Production (NYSE:PXP) is up 2.9% to reach a current price of $39.66 per share. The company's volume for the day so far is 2.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. The P/S ratio for PXP is a high 2.15. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Walter Energy (NYSE:WLT) has fallen 2.6% and is currently trading at $35.03 per share. The company's volume for the day so far is 1.4 million shares, 0.4 times the average volume over the last three months. If a stock price makes a big move up or down, volume lets us know the significance of that 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 ratio is calculated by dividing total liabilities by total assets. WLT has a debt ratio of 67.9%, which is on the high side. This means that most of the company's assets are financed through debt. 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.

Unit (NYSE:UNT) has moved up 2.3% and is currently trading at $44.66 per share. The company's volume for the day so far is 173,912 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 capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. UNT's capitalization ratio is 14.3%, which is relatively low. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

Suburban Propane Partners (NYSE:SPH) is currently trading at $40.50 per share, a 2.2% increase. At 219,549 shares, the company's volume so far today is 0.8 times the current daily 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for SPH is 33.8, above the industry average of 11.77. 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

Eni S.p.A (NYSE:E) has increased to a share price of $48.25, a 2.2% rise. So far today, the company's volume is 498,143 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. 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. The D/E ratio for E is 55%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Increasing 1.8%, Lufkin Industries (Nasdaq:LUFK) is trading at $58.70 per share. So far today, the company's volume is 567,294 shares, 1.1 times its current three-month average. 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 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. 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. LUFK has a P/B ratio of 2.61 which shows that its share price is higher than its book value. 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. 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

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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