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Gardner Denver, Inc. and More Big Movers in Capital Goods Today
The morning has been bad for the market. The Nasdaq has slipped 0.1%; the S&P 500 has decreased 0.2%; and the Dow is trading down 0.2%. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.
The Capital Goods sector (XLI) is currently lagging behind the overall market, down 0.2%, and its current biggest movers are:
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Robbins & Myers (NYSE:RBN) rose a significant 27.4% to reach $59.62 per share. So far today, 14.9 million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. The trading volume for a stock indicates the level of investor interest. 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). RBN has a PEG ratio of 0.99. 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.
Middleby (Nasdaq:MIDD) is trading at $112.53 per share, a significant rise of 12.3%. The company's volume is currently 719,028 shares for the day, 10.3 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. MIDD's P/B ratio of 3.9 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. 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: Using The Price-To-Book Ratio To Evaluate Companies
Applied Industrial (NYSE:AIT) has risen 8.7% to hit a current price of $41.47 per share. This morning, the company is trading a volume of 307,225 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for AIT is 2.2%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
Alliant Techsystems (NYSE:ATK) is up 7.9% to reach a current price of $52.29 per share. So far today, the company's volume is 405,163 shares, 1.5 times the current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. A company's value as an investment is more easily 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. 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 ATK is 0.36, which is relatively low. Low P/S ratios can indicate unrecognized value potential - so long as other criteria like high profit margins, low debt levels and growth prospects are in place. 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.
Sodastream (Nasdaq:SODA) is currently trading at a share price of $39.37, a 3.9% decline. So far today, the company's volume is 783,115 shares. This is a sign that there will be less trading activity than there was yesterday. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. SODA has a low debt ratio of 28.3%. 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.
At $41.62, Texas Industries (NYSE:TXI) has slipped 2.8%. At 105,727 shares, the company's volume so far today is consistent with its current daily average. Volume is an important indicator because it indicates how significant a price shift is. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. TXI's P/E ratio is 158.6. 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: Can Investors Trust the P/E Ratio?
Gardner Denver (NYSE:GDI) has increased to a share price of $61.32, a 2.2% rise. The company is currently trading a volume of 619,526 shares. Volume indicates the level of interest that investors have in a company at its current price. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt-equity (D/E) ratio is a leverage ratio. GDI's debt-equity ratio of 39% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Capital Goods sector (XLI) is currently lagging behind the overall market, down 0.2%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Robbins & Myers, Inc. (NYSE:RBN) | $1.99 billion | +27.4% |
| The Middleby Corporation (Nasdaq:MIDD) | $1.88 billion | +12.3% |
| Applied Industrial Technologies (NYSE:AIT) | $1.61 billion | +8.7% |
| Alliant Techsystems Inc. (NYSE:ATK) | $1.58 billion | +7.9% |
| Sodastream International Limited (Nasdaq:SODA) | $825.2 million | -3.9% |
| Texas Industries, Inc. (NYSE:TXI) | $1.2 billion | -2.8% |
| Gardner Denver, Inc. (NYSE:GDI) | $2.94 billion | +2.2% |
Robbins & Myers (NYSE:RBN) rose a significant 27.4% to reach $59.62 per share. So far today, 14.9 million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. The trading volume for a stock indicates the level of investor interest. 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). RBN has a PEG ratio of 0.99. 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.
Middleby (Nasdaq:MIDD) is trading at $112.53 per share, a significant rise of 12.3%. The company's volume is currently 719,028 shares for the day, 10.3 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. MIDD's P/B ratio of 3.9 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. 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: Using The Price-To-Book Ratio To Evaluate Companies
Applied Industrial (NYSE:AIT) has risen 8.7% to hit a current price of $41.47 per share. This morning, the company is trading a volume of 307,225 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for AIT is 2.2%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
Sodastream (Nasdaq:SODA) is currently trading at a share price of $39.37, a 3.9% decline. So far today, the company's volume is 783,115 shares. This is a sign that there will be less trading activity than there was yesterday. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. SODA has a low debt ratio of 28.3%. 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.
At $41.62, Texas Industries (NYSE:TXI) has slipped 2.8%. At 105,727 shares, the company's volume so far today is consistent with its current daily average. Volume is an important indicator because it indicates how significant a price shift is. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. TXI's P/E ratio is 158.6. 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: Can Investors Trust the P/E Ratio?
Gardner Denver (NYSE:GDI) has increased to a share price of $61.32, a 2.2% rise. The company is currently trading a volume of 619,526 shares. Volume indicates the level of interest that investors have in a company at its current price. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt-equity (D/E) ratio is a leverage ratio. GDI's debt-equity ratio of 39% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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