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Tickers in this Article: SHG, BCS, WBK, BEN, BAP, MDY, CIM
The market is doing well so far today. The Nasdaq is up 2.4%; the S&P 500 has moved up 1.9%; and the Dow has climbed 1.7%. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

Underperforming the market overall, the Financial sector (XLF) is up 1.9%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG)$15.64 billion+6.1%
Barclays PLC (ADR) (NYSE:BCS)$33.04 billion-5%
Westpac Banking Corporation (ADR) (NYSE:WBK)$63.33 billion+3.8%
Franklin Resources (NYSE:BEN)$22.78 billion+3.4%
Credicorp Ltd. (USA) (NYSE:BAP)$9.67 billion+2.6%
SPDR S&P MidCap 400 ETF (NYSE:MDY)$9.26 billion+2.3%
Chimera Investment Corporation (NYSE:CIM)$2.42 billion-2.2%
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Shinhan Financial Group Co., Ltd (NYSE:SHG) is up 6.1% to reach a current price of $69.98 per share. This morning, the company's volume is 8,216 shares. This is 0.3 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for SHG is 1.18, 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.

Barclays PLC (NYSE:BCS) is down 5% to reach $10.30 per share. At 8.2 million shares, the company's volume so far today is while it was 22.1 million shares yesterday. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. BCS' capitalization ratio is 30.9%. 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.

Westpac Banking Corporation (NYSE:WBK) is at $108.43 per share after an increase of 3.8%. So far today, 6,187 shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. WBK has a high D/E ratio of 385%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Franklin (NYSE:BEN) has risen 3.4% to hit a current price of $109.45 per share. At 324,945 shares, the company's volume so far today is 0.3 times its current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. BEN has a low debt ratio of 36.4%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.

Rising 2.6%, Credicorp Ltd (NYSE:BAP) is currently trading at $124.38 per share. So far today, the company's volume is 113,442 shares. This is 0.4 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. Compared to the industry average of 9.25, BAP's P/E ratio of 13.4 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Find P/E And PEG Ratios

Increasing 2.3%, SPDR S&P MidCap 400 (NYSE:MDY) is trading at $170.66 per share. The company's volume is currently 716,263 shares for the day, lighter than yesterday's volume of 2.9 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. MDY has a dividend yield of 1.2%, which is fairly low. This may indicate that the company's stock is overpriced. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Guide To Stock-Picking Strategies: Income Investing

Chimera (NYSE:CIM) is currently trading at a share price of $2.31, a 2.2% decline. This morning, the company is trading a volume of 8.1 million shares. 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. The price/sales ratio measures a company's stock market price by its revenues. CIM has a P/S ratio of -30.78, on the low end. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. 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 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. 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.

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