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Tickers in this Article: NSM, GS, ASPS, V, ACTG, KKR, BLK
The market is currently up, with the Nasdaq moving up 0.7%, the S&P 500 rising 1% and the Dow climbing 1.1%. 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.

The Financial sector (XLF) is up 1.4%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Nationstar Mortgage Holdings (NYSE:NSM)$2.96 billion+6.8%
Goldman Sachs (NYSE:GS)$54.5 billion+4.2%
Altisource Portfolio Solutions (Nasdaq:ASPS)$2.01 billion+2.2%
Visa (NYSE:V)$108.92 billion+2%
Acacia (Nasdaq:ACTG)$1.36 billion-1.9%
KKR & Co (NYSE:KKR)$3.6 billion-1.9%
BlackRock (NYSE:BLK)$30.79 billion+1.8%
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Nationstar Mortgage Holdings (NYSE:NSM) is at $35.44 per share after an increase of 6.8%. So far today, 1.7 million shares have changed hands. A stock's volume conveys how excited investors are about it. 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/book value ratio is calculated by dividing the current stock price by the company's book value per share. NSM's stock is trading for more than its book value with a P/B ratio of 4.99. 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 value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: How Buybacks Warps The Price-To-Book Ratio

Rising 4.2%, Goldman Sachs (NYSE:GS) is currently trading at $118.51 per share. The company's volume is currently 2.1 million shares for the day, in keeping with its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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 GS is 1.39, 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.

After rising 2.2%, Altisource Portfolio Solutions (Nasdaq:ASPS) is currently trading at a share price of $88.18. So far today, the company's volume is 57,076 shares. This is on pace to reach yesterday's trading volume of 131,183 shares. 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. The debt ratio shows the proportion of assets that a company is financing through debt. ASPS' debt ratio of 24.5% is on the low side. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Visa (NYSE:V) has increased to a share price of $136.97, a 2% rise. With 1.8 million shares changing hands so far today, the company's volume is in keeping with the average volume over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. V has a dividend yield of 0.7%, which is fairly low. If you are an income investor, this stock may not be attractive to you. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Guide To Stock-Picking Strategies: Income Investing

After a decline of 1.9%, Acacia (Nasdaq:ACTG) has hit a share price of $26.90. So far today, the company's volume is 301,169 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. ACTG's P/E ratio of 20.2 is under the industry average of 21.23. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: Investment Valuation Ratios: Price/Earnings Ratio

KKR & Co (NYSE:KKR) is trading at $14.83 per share, down 1.9%. The company's volume is currently 313,953 shares for the day, 0.3 times the current daily average. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. KKR has a PEG ratio of 0.83, 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.

BlackRock (NYSE:BLK) is currently trading at $181.59 per share, a 1.8% increase. So far today, 143,946 shares of the company's stock have changed hands. This is on pace to fall short of yesterday's volume of 611,859 shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. BLK's P/B ratio of 1.27 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. 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: Using The Price-To-Book Ratio To Evaluate 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.

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