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Eni S.p.A and Other Big Movers In Energy on September 24, 2012
The morning has been bad for the market. The Nasdaq is down 0.7%; the S&P 500 has decreased 0.2%; and the Dow has fallen 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 ahead of the overall market, down only 0.4%, and its biggest movers are currently:
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After a decline of 7%, Cobalt International Energy (NYSE:CIE) has hit a share price of $22.98. The company is currently trading a volume of two 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. 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. CIE's P/B ratio of 3.93 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Slipping 5.3%, CGG Veritas (NYSE:CGV) is currently trading at $31.53 per share. The company's volume is currently 8,000 shares for the day, 0.3 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market price by its revenues. CGV has a high P/S ratio of 1.25. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Flotek Industries (NYSE:FTK) has risen 3.8% to hit a current price of $13.22 per share. The company is trading at a volume of 507,026 shares. This is about the same trading activity as there was yesterday. 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 ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. The debt ratio for FTK is a low 42.8%. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Increasing 3.3%, Chesapeake Midstream Partners (NYSE:ACMP) is trading at $32.70 per share. The company's volume is currently 126,372 shares for the day, 0.4 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. ACMP has a PEG ratio of 1.26, which is consistent with the industry average. 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.
At $46.43, Eni S.p.A (NYSE:E) has slipped 3.1%. So far today, 253,616 shares have changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. The capitalizion ratio of 29.9% is on the low end. Low leverage is a significant balance sheet strength, a sign of a less risky investment. 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.
Questar (NYSE:STR) has moved up 2.9% and is currently trading at $19.93 per share. At 714,673 shares, the company's volume so far today is 0.7 times the average daily volume. 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. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). STR's P/E ratio of 16.4 falls below the industry average of 34.13. 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: Profit With The Power Of Price-To-Earnings
EV Energy Partners (Nasdaq:EVEP) is down 2.5% to reach $60.58 per share. The company's volume is currently 199,397 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. 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. EVEP's D/E ratio is 63%. 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.
The Energy sector (XLE) is currently ahead of the overall market, down only 0.4%, and its biggest movers are currently:
| Company | Market Cap | Percentage Change |
| Cobalt International Energy (NYSE:CIE) | $10.15 billion | -7% |
| CGG Veritas (NYSE:CGV) | $5.06 billion | -5.3% |
| Flotek Industries (NYSE:FTK) | $632.5 million | +3.8% |
| Chesapeake Midstream Partners (NYSE:ACMP) | $4.69 billion | +3.3% |
| Eni S.p.A (NYSE:E) | $86.84 billion | -3.1% |
| Questar (NYSE:STR) | $3.4 billion | +2.9% |
| EV Energy Partners (Nasdaq:EVEP) | $2.63 billion | -2.5% |
After a decline of 7%, Cobalt International Energy (NYSE:CIE) has hit a share price of $22.98. The company is currently trading a volume of two 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. 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. CIE's P/B ratio of 3.93 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Slipping 5.3%, CGG Veritas (NYSE:CGV) is currently trading at $31.53 per share. The company's volume is currently 8,000 shares for the day, 0.3 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market price by its revenues. CGV has a high P/S ratio of 1.25. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Flotek Industries (NYSE:FTK) has risen 3.8% to hit a current price of $13.22 per share. The company is trading at a volume of 507,026 shares. This is about the same trading activity as there was yesterday. 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 ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. The debt ratio for FTK is a low 42.8%. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
At $46.43, Eni S.p.A (NYSE:E) has slipped 3.1%. So far today, 253,616 shares have changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. The capitalizion ratio of 29.9% is on the low end. Low leverage is a significant balance sheet strength, a sign of a less risky investment. 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.
Questar (NYSE:STR) has moved up 2.9% and is currently trading at $19.93 per share. At 714,673 shares, the company's volume so far today is 0.7 times the average daily volume. 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. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). STR's P/E ratio of 16.4 falls below the industry average of 34.13. 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: Profit With The Power Of Price-To-Earnings
EV Energy Partners (Nasdaq:EVEP) is down 2.5% to reach $60.58 per share. The company's volume is currently 199,397 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. 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. EVEP's D/E ratio is 63%. 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.
by
Investopedia Staff
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