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General Growth Properties and More Big Movers in Services on August 24, 2012
The market is currently up, with the Nasdaq moving up 0.6%, the S&P 500 rising 0.5% and the Dow climbing 0.6%.
The Services sector (IYC) is up 0.6%, outperforming the market overall. The biggest movers in the sector so far are:
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Choice Hotels International (NYSE:CHH) is at a share price of $32.01 after a sharp decline of 25.9%. At 299,567 shares, the company's volume so far today is one times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. CHH has a high debt ratio of 101.3%. 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.
After a big jump of 17.5%, Aruba Networks (Nasdaq:ARUN) is trading at $19.88 per share. So far today, 7.3 million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. ARUN has a P/E ratio of 29.8, high compared to the industry average of 11.98. 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 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: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Increasing 5.3%, Madison Square (Nasdaq:MSG) is trading at $42.40 per share. So far today, the company's volume is 743,704 shares, 3.8 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. MSG's stock is trading for more than its book value with a P/B ratio of 2.48. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
rue21 (Nasdaq:RUE) has fallen 4.4% and is currently trading at $27.60 per share. So far today, the company's volume is 361,924 shares. 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. 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. RUE has a low P/S ratio of 0.94. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. 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.
Zumiez (Nasdaq:ZUMZ) is down 4.4% to reach $31.97 per share. The company's volume is currently 362,403 shares for the day, 1.2 times its current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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). PEG ratio for ZUMZ is consistent with the industry average at 1.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
General Growth Properties (NYSE:GGP) is currently trading at a share price of $19.50, a 4% decline. The company is trading at a volume of 9.7 million shares. At this rate, trading activity will likely be down from yesterday when 43.8 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. 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. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for GGP is 204%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Best (NYSE:BBY) has decreased to $17.34 per share, a 3.7% fall. The company's volume is currently 3.8 million shares for the day, 0.3 times the average daily volume. 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. 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 shows the proportion of assets that a company is financing through debt. BBY's debt ratio of 74.1% is fairly high. This means that most of the company's assets are financed through debt. 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 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
The Services sector (IYC) is up 0.6%, outperforming the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Choice Hotels International (NYSE:CHH) | $2.5 billion | -25.9% |
| Aruba Networks (Nasdaq:ARUN) | $1.9 billion | +17.5% |
| Madison Square (Nasdaq:MSG) | $3.04 billion | +5.3% |
| rue21 (Nasdaq:RUE) | $708 million | -4.4% |
| Zumiez (Nasdaq:ZUMZ) | $1.05 billion | -4.4% |
| General Growth Properties (NYSE:GGP) | $19.07 billion | -4% |
| Best (NYSE:BBY) | $6.12 billion | -3.7% |
Choice Hotels International (NYSE:CHH) is at a share price of $32.01 after a sharp decline of 25.9%. At 299,567 shares, the company's volume so far today is one times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. CHH has a high debt ratio of 101.3%. 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.
After a big jump of 17.5%, Aruba Networks (Nasdaq:ARUN) is trading at $19.88 per share. So far today, 7.3 million shares of the company's stock have changed hands. This is more trading activity than there was yesterday. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. ARUN has a P/E ratio of 29.8, high compared to the industry average of 11.98. 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 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: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Increasing 5.3%, Madison Square (Nasdaq:MSG) is trading at $42.40 per share. So far today, the company's volume is 743,704 shares, 3.8 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. MSG's stock is trading for more than its book value with a P/B ratio of 2.48. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
rue21 (Nasdaq:RUE) has fallen 4.4% and is currently trading at $27.60 per share. So far today, the company's volume is 361,924 shares. 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. 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. RUE has a low P/S ratio of 0.94. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. 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.
Zumiez (Nasdaq:ZUMZ) is down 4.4% to reach $31.97 per share. The company's volume is currently 362,403 shares for the day, 1.2 times its current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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). PEG ratio for ZUMZ is consistent with the industry average at 1.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
General Growth Properties (NYSE:GGP) is currently trading at a share price of $19.50, a 4% decline. The company is trading at a volume of 9.7 million shares. At this rate, trading activity will likely be down from yesterday when 43.8 million shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. 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. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for GGP is 204%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Best (NYSE:BBY) has decreased to $17.34 per share, a 3.7% fall. The company's volume is currently 3.8 million shares for the day, 0.3 times the average daily volume. 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. 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 shows the proportion of assets that a company is financing through debt. BBY's debt ratio of 74.1% is fairly high. This means that most of the company's assets are financed through debt. 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 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. 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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