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Tickers in this Article: GNTX, UA, CRDN, WHR, PCAR, ITW, TRW
The morning has been bad for the market. The Nasdaq has fallen 0.2%; the S&P 500 has decreased 0.5%; and the Dow has declined 0.6%. 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 down 0.2%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
Gentex Corporation (Nasdaq:GNTX)$3.05 billion-23.9%
Under Armour Inc (NYSE:UA)$4.51 billion+13.4%
Ceradyne, Inc. (Nasdaq:CRDN)$525.7 million-6.4%
Whirlpool (NYSE:WHR)$5.2 billion-6.4%
Paccar (Nasdaq:PCAR)$13.47 billion+4%
Illinois Tool Works (NYSE:ITW)$25.57 billion-2.9%
TRW Automotive Holdings Corp. (NYSE:TRW)$4.31 billion-2.4%
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Shares of Gentex (Nasdaq:GNTX) are currently trading at $16.09, a steep decline of 23.9%. So far today, 9.5 million shares have changed hands, more than yesterday's 2.3 million shares. The trading volume for a stock indicates the level of investor interest. 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 debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for GNTX is a low 14.7%. 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. 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.

Under Armour (NYSE:UA) has soared 13.4% to reach a current price of $54.88 per share. So far this morning, 5.9 million shares have changed hands. This is 2.8 times its 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. UA's debt-equity ratio of 11% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Ceradyne (Nasdaq:CRDN) has decreased to $20.26 per share, a 6.4% fall. The company's volume for the day so far is 283,913 shares, 2.2 times the average volume over the last three months. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The dividend yield is calculated by dividing a company's dividends per share by its stock price. CRDN has a dividend yield of 2.8%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Due Diligence On Dividends

Slipping 6.4%, Whirlpool (NYSE:WHR) is currently trading at $63 per share. The company's volume for the day so far is 2.6 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 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. The P/B ratio for WHR is 1.12, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Paccar (Nasdaq:PCAR) has increased to a share price of $39.29, a 4% rise. At 2.1 million shares, the company's volume so far today is consistent with the volume from yesterday. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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. Compared to the industry average of 4.26, PCAR's P/E ratio of 11.5 is quite high. 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. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Profit With The Power Of Price-To-Earnings

Illinois Tool (NYSE:ITW) is down 2.9% to reach $52 per share. The company's volume for the morning is 2.4 million shares. This is 0.6 times the average daily volume. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for ITW is 1.51, which is relatively high. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

After a decline of 2.4%, TRW Automotive (NYSE:TRW) has hit a share price of $34.27. The company's volume is currently 265,289 shares for the day, 0.2 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a 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. TRW has a debt ratio of 69.8%, which is on the high side. 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.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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