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Tickers in this Article: NAV, TRW, FDML, DECK, GPC, RLD, ALV
It's been a bad day for the market after the morning's trading. The Nasdaq has declined 0.8%; the S&P 500 has decreased 0.5%; and the Dow has fallen 0.7%. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.

The Consumer Cyclical sector (XLY) is currently ahead of the overall market, down only 0.7%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Navistar (NYSE:NAV)$1.51 billion-5.1%
TRW Automotive (NYSE:TRW)$5.33 billion-3.2%
Federal-Mogul (Nasdaq:FDML)$925.7 million+2.6%
Deckers (Nasdaq:DECK)$1.83 billion-2.3%
Genuine (NYSE:GPC)$9.8 billion-2.1%
RealD (NYSE:RLD)$542.3 million+2%
Autoliv (NYSE:ALV)$5.66 billion-1.9%
Broker Summary: Charles Schwab Online Brokerage

Navistar (NYSE:NAV) is trading at $20.85 per share, down 5.1%. This morning, the company is trading a volume of 713,074 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. NAV has a low P/S ratio of 0.16. 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. 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.

Currently trading at $42.32 per share, TRW Automotive (NYSE:TRW) has fallen 3.2%. So far today, the company's volume is 270,143 shares, 0.3 times the current three-month average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalizion ratio of 29.3% is on the low end. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Federal-Mogul (Nasdaq:FDML) is currently trading at $9.60 per share, a 2.6% increase. So far today, the company's volume is 53,004 shares. Volume is an important indicator because it indicates how significant a price 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. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. FDML has a P/B ratio of 1.02 which shows that its share price is higher than its book value. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio

After a decline of 2.3%, Deckers (Nasdaq:DECK) has hit a share price of $48.37. So far today, the company's volume is 550,611 shares, in keeping with its current daily average. 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 shows the proportion of assets that a company is financing through debt. DECK has a debt ratio of 29.7%, which is fairly low. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Slipping 2.1%, Genuine (NYSE:GPC) is currently trading at $61.83 per share. So far today, the company's volume is 511,458 shares. A stock's volume conveys how excited investors are about it. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. GPC has a P/S ratio of 0.73, on the low end. 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.

After an increase of 2%, RealD (NYSE:RLD) has reached a current price of $10.11. With 269,810 shares changing hands so far today, the company's volume is consistent with its current three-month average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. RLD has a fairly low capitalization ratio of 10.9%. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Falling 1.9%, Autoliv (NYSE:ALV) is currently at a share price of $58.16. The company is trading at a volume of 178,469 shares. At this rate, trading activity will likely be down from yesterday when 973,597 shares changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. ALV's P/E ratio of 10.6 is above the industry average of 4.15. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios

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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