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Financial Stocks, Including Visa, Making Big Moves on September 11, 2012
The market is doing well so far today. The Nasdaq is trading up 0.3%; the S&P 500 has increased 0.6%; and the Dow is up 0.7%. 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.
Outperforming the market overall, the Financial sector (XLF) is up 0.8% and its biggest movers so far today are:
Forex Broker Summary: UFXMarkets
Legg Mason, Inc (NYSE:LM) is up 5.9% to reach a current price of $26.98 per share. The company's volume is currently 1.6 million shares for the day, 1.3 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for LM is 1.38, 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. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Deutsche (NYSE:DB) has risen 5.9% and is currently trading at $42.56 per share. So far today, 2.5 million shares have changed hands. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the 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. The debt ratio for DB is 97.5%, which is relatively high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Increasing 2.5%, Visa (NYSE:V) is trading at $131.86 per share. The company's volume for the day so far is 2.1 million shares, 0.8 times its average over the past three months. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The dividend yield is calculated by dividing a company's dividends per share by its stock price. V has a dividend yield of 0.7%, which is fairly low. This may indicate that the company's stock is overpriced. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Guide To Stock-Picking Strategies: Income Investing
Goldman Sachs (NYSE:GS) has moved up 2.5% and is currently trading at $117.51 per share. The company's volume for the day so far is 1.5 million shares. This is on pace to fall short of yesterday's volume of 4.2 million shares. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. GS has a PEG ratio of 1.39, 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.
M&T Bank (NYSE:MTB) is at $92.02 per share after an increase of 1.7%. The company's volume is currently 386,545 shares for the day, 0.2 times the 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. 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. 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. MTB's stock is trading for more than its book value with a P/B ratio of 1.33. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
MasterCard (NYSE:MA) has risen 1.7% to hit a current price of $444.78 per share. The company's volume for the day so far is 324,344 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. MA's P/E ratio of 26.2 is above the industry average of 17.66. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
After an increase of 1.6%, Westpac Banking Corporation (NYSE:WBK) has reached a current price of $123.74. So far today, the company's volume is 16,802 shares, in keeping with its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. WBK has a debt ratio of 93.4%, which is on the high side. As such, the company is highly leveraged and not highly liquid. 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.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
Outperforming the market overall, the Financial sector (XLF) is up 0.8% and its biggest movers so far today are:
| Company | Market Cap | Percentage Change |
| Legg Mason, Inc (NYSE:LM) | $3.44 billion | +5.9% |
| Deutsche (NYSE:DB) | $36.87 billion | +5.9% |
| Visa (NYSE:V) | $104.38 billion | +2.5% |
| Goldman Sachs (NYSE:GS) | $54.98 billion | +2.5% |
| M&T Bank (NYSE:MTB) | $11.46 billion | +1.7% |
| MasterCard (NYSE:MA) | $52.36 billion | +1.7% |
| Westpac Banking Corporation (NYSE:WBK) | $74.04 billion | +1.6% |
Legg Mason, Inc (NYSE:LM) is up 5.9% to reach a current price of $26.98 per share. The company's volume is currently 1.6 million shares for the day, 1.3 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for LM is 1.38, 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. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Deutsche (NYSE:DB) has risen 5.9% and is currently trading at $42.56 per share. So far today, 2.5 million shares have changed hands. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the 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. The debt ratio for DB is 97.5%, which is relatively high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Increasing 2.5%, Visa (NYSE:V) is trading at $131.86 per share. The company's volume for the day so far is 2.1 million shares, 0.8 times its average over the past three months. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The dividend yield is calculated by dividing a company's dividends per share by its stock price. V has a dividend yield of 0.7%, which is fairly low. This may indicate that the company's stock is overpriced. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Guide To Stock-Picking Strategies: Income Investing
Goldman Sachs (NYSE:GS) has moved up 2.5% and is currently trading at $117.51 per share. The company's volume for the day so far is 1.5 million shares. This is on pace to fall short of yesterday's volume of 4.2 million shares. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. GS has a PEG ratio of 1.39, 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.
M&T Bank (NYSE:MTB) is at $92.02 per share after an increase of 1.7%. The company's volume is currently 386,545 shares for the day, 0.2 times the 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. 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. 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. MTB's stock is trading for more than its book value with a P/B ratio of 1.33. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
MasterCard (NYSE:MA) has risen 1.7% to hit a current price of $444.78 per share. The company's volume for the day so far is 324,344 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. MA's P/E ratio of 26.2 is above the industry average of 17.66. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
After an increase of 1.6%, Westpac Banking Corporation (NYSE:WBK) has reached a current price of $123.74. So far today, the company's volume is 16,802 shares, in keeping with its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. WBK has a debt ratio of 93.4%, which is on the high side. As such, the company is highly leveraged and not highly liquid. 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.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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