It's been a bad day for the market after the morning's trading. The Nasdaq has declined 0.9%; the S&P 500 has fallen 0.7%; and the Dow has slipped 0.7%. 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 ahead of the overall market, down only 0.8%, and its biggest movers are currently:
|Company||Market Cap||Percentage Change|
|Pandora Media (NYSE:P)||$1.68 billion||+18.3%|
|Ciena (Nasdaq:CIEN)||$1.66 billion||-16.9%|
|First Solar (Nasdaq:FSLR)||$2.1 billion||-11.4%|
|F5 Networks (Nasdaq:FFIV)||$8.07 billion||-4.1%|
|Stratasys (Nasdaq:SSYS)||$1.48 billion||-4.1%|
|Sourcefire (Nasdaq:FIRE)||$1.6 billion||-3.6%|
|OYO (Nasdaq:OYOG)||$567.3 million||-3.1%|
Software Summary: Finviz.com Stock Screener
Pandora Media (NYSE:P) rose a significant 18.3% to reach $11.92 per share. So far today, the company's volume is 22.4 million shares. A stock's volume conveys how excited investors are about it. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. The P/B ratio for P is 21.67, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Taking a 16.9% hit, Ciena (Nasdaq:CIEN) is currently trading at $13.89 per share. The company's volume is currently 17.5 million shares for the day, 4.3 times the average volume over the last three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for CIEN is 0.82, which is relatively low. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
First Solar (Nasdaq:FSLR) is at a share price of $21.43 after a sharp decline of 11.4%. The company's volume for the day so far is 8.8 million shares. This is 1.2 times the average daily volume. 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. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. FSLR's debt ratio of 38.7% is on the low side. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Currently trading at $97.89 per share, F5 Networks (Nasdaq:FFIV) has fallen 4.1%. So far today, the company's volume is 612,633 shares, consistent with the volume from yesterday which is likely to result in less activity than yesterday's volume of 1.4 million shares. 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. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). FFIV has a PEG ratio of 1.48, 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.
Stratasys (Nasdaq:SSYS) has fallen 4.1% and is currently trading at $66.40 per share. So far today, 228,770 shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price. 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. 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. SSYS' P/E ratio of 77.8 is above the industry average of 13.38. This could mean that the market is expecting big things over the next few months or years. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?
Sourcefire (Nasdaq:FIRE) is down 3.6% to reach $51.49 per share. At 107,444 shares, the company's volume so far today is 0.2 times the current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. 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. FIRE's P/B ratio of 7.1 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
Falling 3.1%, OYO (Nasdaq:OYOG) is currently at a share price of $86.25. So far this morning, 17,383 shares have changed hands. This is in keeping with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. 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 OYOG is 3.06, 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 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.