Free Annual Reports
Healthcare Stocks Making Big Moves on July 16, 2012
After the morning's trading, the Nasdaq has been relatively flat, the S&P 500 has fallen 0.1% and the Dow has slipped 0.3%. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
While the market overall has shown little change, the Healthcare sector (XLV) is up 0.2% and its current biggest movers are:
Broker Summary: Charles Schwab Online Brokerage
After a big jump of 37%, Par Pharmaceutical Companies (NYSE:PRX) is trading at $50.11 per share. With 5.4 million shares changing hands so far today, the company's volume is 20.1 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for PRX is 42.5%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. PRX's operating profit margin is -7.8%. This means that the company came in with a net operating loss in the most recent quarter. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. The company's net profit margin is 3.5%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. PRX's stock is trading for more than its book value with a P/B ratio of 3.13. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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
Alnylam Pharmaceuticals (Nasdaq:ALNY) rose a significant 35.3% to reach $16.94 per share. The company's volume for the day so far is 2.9 million shares. This is 12.2 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. ALNY's operating and net profit margins are both negative. This is because the company reported a net loss and net operating loss in the most recent quarter.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 ALNY is a high 6.96. This could be a good sign if the share price increases. 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.
Spectrum Pharmaceuticals (Nasdaq:SPPI) has moved up 5.6% and is currently trading at $17.23 per share. This morning, 778,111 shares have been traded, which is less activity than yesterday's volume of 969,794 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis is a great way to understand the profitability of companies. SPPI has a high gross profit margin of 78.1%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. SPPI's operating profit margin is 38.6%. Net profit margin is a good ratio for determining how a company is performing. The company has a net profit margin of 39.3%.
Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. 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. The debt ratio for SPPI is a low 28.3%. 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.
After a decline of 5%, VCA Antech (Nasdaq:WOOF) has hit a share price of $22.00. The company is currently trading a volume of 853,377 shares. Volume is used to evaluate how meaningful the price movement of a stock is. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for WOOF is 26.9%. WOOF has an operating profit margin of 13.1% and a net profit margin of 6.6%, both low compared to its gross profit margin.
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. The D/E ratio for WOOF is 57%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
At $100.91, MWI Veterinary Supply (Nasdaq:MWIV) has slipped 4.8%. So far today, the company's volume is 85,749 shares, 1.3 times its 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. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. MWIV has a low gross profit margin of 13%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Operating margin for MWIV is 4.2% and net margin is 2.7%, both low relative to its gross margin.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. MWIV has a P/B ratio of 3.91 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: Investment Valuation Ratios: Price/Book Value Ratio
Increasing 3.8%, Impax Laboratories (Nasdaq:IPXL) is trading at $20.59 per share. So far this morning, 510,867 shares have changed hands. This is 0.9 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Margin ratios highlight companies that are worth further examination. The gross profit margin for IPXL is 52.7%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. IPXL has an operating profit margin of 14.4%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net profit margin for the company is 12%.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. IPXL's P/E ratio of 20.9 is above the industry average of 12.59. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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
Medivation (Nasdaq:MDVN) is at $94.70 per share after an increase of 3.8%. So far today, 315,346 shares have changed hands, while it was 363,199 shares yesterday. If a stock price moves on high volume, this means that the change is a significant one. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. MDVN has a low gross profit margin of -16.9%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. MDVN's operating margin of 3% and net margin of -36.3% are low relative to its gross margin.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. MDVN's P/S ratio of 32.77 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
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.
While the market overall has shown little change, the Healthcare sector (XLV) is up 0.2% and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Par Pharmaceutical Companies, Inc. (NYSE:PRX) | $1.34 billion | +37% |
| Alnylam Pharmaceuticals, Inc. (Nasdaq:ALNY) | $650.4 million | +35.3% |
| Spectrum Pharmaceuticals, Inc. (Nasdaq:SPPI) | $971.4 million | +5.6% |
| VCA Antech, Inc. (Nasdaq:WOOF) | $2.03 billion | -5% |
| MWI Veterinary Supply, Inc. (Nasdaq:MWIV) | $1.35 billion | -4.8% |
| Impax Laboratories Inc (Nasdaq:IPXL) | $1.33 billion | +3.8% |
| Medivation, Inc. (Nasdaq:MDVN) | $3.31 billion | +3.8% |
After a big jump of 37%, Par Pharmaceutical Companies (NYSE:PRX) is trading at $50.11 per share. With 5.4 million shares changing hands so far today, the company's volume is 20.1 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for PRX is 42.5%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. PRX's operating profit margin is -7.8%. This means that the company came in with a net operating loss in the most recent quarter. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. The company's net profit margin is 3.5%.
It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. PRX's stock is trading for more than its book value with a P/B ratio of 3.13. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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
Alnylam Pharmaceuticals (Nasdaq:ALNY) rose a significant 35.3% to reach $16.94 per share. The company's volume for the day so far is 2.9 million shares. This is 12.2 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. ALNY's operating and net profit margins are both negative. This is because the company reported a net loss and net operating loss in the most recent quarter.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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 ALNY is a high 6.96. This could be a good sign if the share price increases. 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.
Spectrum Pharmaceuticals (Nasdaq:SPPI) has moved up 5.6% and is currently trading at $17.23 per share. This morning, 778,111 shares have been traded, which is less activity than yesterday's volume of 969,794 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Margin analysis is a great way to understand the profitability of companies. SPPI has a high gross profit margin of 78.1%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. SPPI's operating profit margin is 38.6%. Net profit margin is a good ratio for determining how a company is performing. The company has a net profit margin of 39.3%.
Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. 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. The debt ratio for SPPI is a low 28.3%. 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.
After a decline of 5%, VCA Antech (Nasdaq:WOOF) has hit a share price of $22.00. The company is currently trading a volume of 853,377 shares. Volume is used to evaluate how meaningful the price movement of a stock is. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for WOOF is 26.9%. WOOF has an operating profit margin of 13.1% and a net profit margin of 6.6%, both low compared to its gross profit margin.
At $100.91, MWI Veterinary Supply (Nasdaq:MWIV) has slipped 4.8%. So far today, the company's volume is 85,749 shares, 1.3 times its 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. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. MWIV has a low gross profit margin of 13%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Operating margin for MWIV is 4.2% and net margin is 2.7%, both low relative to its gross margin.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. MWIV has a P/B ratio of 3.91 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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: Investment Valuation Ratios: Price/Book Value Ratio
Increasing 3.8%, Impax Laboratories (Nasdaq:IPXL) is trading at $20.59 per share. So far this morning, 510,867 shares have changed hands. This is 0.9 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Margin ratios highlight companies that are worth further examination. The gross profit margin for IPXL is 52.7%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. IPXL has an operating profit margin of 14.4%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net profit margin for the company is 12%.
Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. IPXL's P/E ratio of 20.9 is above the industry average of 12.59. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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
Medivation (Nasdaq:MDVN) is at $94.70 per share after an increase of 3.8%. So far today, 315,346 shares have changed hands, while it was 363,199 shares yesterday. If a stock price moves on high volume, this means that the change is a significant one. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. MDVN has a low gross profit margin of -16.9%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. MDVN's operating margin of 3% and net margin of -36.3% are low relative to its gross margin.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. MDVN's P/S ratio of 32.77 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
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
Investopedia.com believes that individuals can excel at managing their financial affairs. As such, we strive to provide free educational content and tools to empower individual investors, including thousands of original and objective articles and tutorials on a wide variety of financial topics.
Free Annual Reports
