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F5 Networks Among Technology's Biggest Movers on August 22, 2012
The market has been slipping so far today. The Nasdaq is trading down 0.2%; the S&P 500 is down 0.4%; and the Dow has slipped 0.5%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.
The Technology sector (XLK) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
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QIHOO 360 (NYSE:QIHU) is trading at $23.37 per share, a significant rise of 10.8%. So far today, 7.1 million shares have changed hands, more than yesterday's 6.6 million shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. QIHU's P/E ratio of 124.5 is above the industry average of 3.14. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio
Ellie Mae (NYSE:ELLI) is up 6.1% to reach a current price of $25.40 per share. This morning, the company is trading a volume of 798,534 shares. This is one times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 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 ELLI is 5.0, which is relatively high. This could be a good sign if the share price increases. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Kayak (Nasdaq:KYAK) has risen 5.6% and is currently trading at $29.27 per share. The company's volume is currently 133,214 shares for the day, 0.7 times the average daily volume. 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. KYAK has a low debt ratio of 12.9%. A low debt ratio means the company has more available cash flow. 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 an increase of 5.3%, EPAM Systems (NYSE:EPAM) has reached a current price of $17.75. The company's volume for the day so far is 72,183 shares. 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. PEG ratio for EPAM is consistent with the industry average at 0.64. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Slipping 3.4%, F5 Networks (Nasdaq:FFIV) is currently trading at $98.81 per share. The company's volume is currently 642,891 shares for the day, on pace to reach yesterday's volume of 1.3 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. FFIV has a P/B ratio of 6.09 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. 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
Sohu.com (Nasdaq:SOHU) has moved up 3% and is currently trading at $41.02 per share. The company's volume for the day so far is 598,083 shares. This is 0.9 times its average volume over the past three months. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). SOHU's P/E ratio of 11.5 falls below the industry average of 32.89. 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. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Mellanox (Nasdaq:MLNX) is trading at $110.90 per share, down 2.7%. So far today, the company's volume is 428,069 shares, consistent with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for MLNX is a high 7.91. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. 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 Technology sector (XLK) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| QIHOO 360 (NYSE:QIHU) | $2.44 billion | +10.8% |
| Ellie Mae (NYSE:ELLI) | $603.1 million | +6.1% |
| Kayak (Nasdaq:KYAK) | $1.04 billion | +5.6% |
| EPAM Systems (NYSE:EPAM) | $721.3 million | +5.3% |
| F5 Networks (Nasdaq:FFIV) | $8.09 billion | -3.4% |
| Sohu.com (Nasdaq:SOHU) | $1.51 billion | +3% |
| Mellanox (Nasdaq:MLNX) | $4.74 billion | -2.7% |
QIHOO 360 (NYSE:QIHU) is trading at $23.37 per share, a significant rise of 10.8%. So far today, 7.1 million shares have changed hands, more than yesterday's 6.6 million shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. QIHU's P/E ratio of 124.5 is above the industry average of 3.14. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio
Ellie Mae (NYSE:ELLI) is up 6.1% to reach a current price of $25.40 per share. This morning, the company is trading a volume of 798,534 shares. This is one times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 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 ELLI is 5.0, which is relatively high. This could be a good sign if the share price increases. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Kayak (Nasdaq:KYAK) has risen 5.6% and is currently trading at $29.27 per share. The company's volume is currently 133,214 shares for the day, 0.7 times the average daily volume. 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. KYAK has a low debt ratio of 12.9%. A low debt ratio means the company has more available cash flow. 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 an increase of 5.3%, EPAM Systems (NYSE:EPAM) has reached a current price of $17.75. The company's volume for the day so far is 72,183 shares. 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. PEG ratio for EPAM is consistent with the industry average at 0.64. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Slipping 3.4%, F5 Networks (Nasdaq:FFIV) is currently trading at $98.81 per share. The company's volume is currently 642,891 shares for the day, on pace to reach yesterday's volume of 1.3 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. FFIV has a P/B ratio of 6.09 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. 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
Sohu.com (Nasdaq:SOHU) has moved up 3% and is currently trading at $41.02 per share. The company's volume for the day so far is 598,083 shares. This is 0.9 times its average volume over the past three months. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). SOHU's P/E ratio of 11.5 falls below the industry average of 32.89. 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. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Mellanox (Nasdaq:MLNX) is trading at $110.90 per share, down 2.7%. So far today, the company's volume is 428,069 shares, consistent with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for MLNX is a high 7.91. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. 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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