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Huaneng Power International, Inc and Other Big Movers In Utilities on September 19, 2012
The market has been doing well after the morning's trading. The Nasdaq has climbed 0.1%; the S&P 500 is up 0.2%; and the Dow has risen 0.3%. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
Outperforming the market overall, the Utilities sector (XLU) is up 0.1% and its biggest movers so far today are:
Broker Summary: Fidelity Online Brokerage
Atlas (NYSE:ATLS) is down 1.7% to reach $34.70 per share. The company's volume for the day so far is 52,082 shares. This is on pace to fall short of yesterday's volume of 220,523 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. ATLS has a D/E ratio of 186%, which is relatively high. This shows that the company's assets are financed primarily through debt. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
Slipping 1.6%, MGE Energy (Nasdaq:MGEE) is currently trading at $52.59 per share. The company's volume for the day so far is 16,159 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. Valuation ratios include 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. 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. MGEE's stock is trading for more than its book value with a P/B ratio of 2.16. 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: Using The Price-To-Book Ratio To Evaluate Companies
Crestwood Midstream (NYSE:CMLP) is currently trading at $24.03 per share, a 1.5% increase. So far today, the company's volume is 51,193 shares. 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. 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. CMLP's dividend yield of 8.4% is on the high end. Companies with large dividends tend to cut them to preserve cash flow, so watch out that you don't end up with a stock that might not be worth owning. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Guide To Stock-Picking Strategies: Income Investing
ITC (NYSE:ITC) has fallen 1.4% and is currently trading at $73.97 per share. The company's volume is currently 68,960 shares for the day, 0.2 times the average daily volume. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ITC has a high P/S ratio of 4.51. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Increasing 1.2%, Brookfield Infrastructure Partners (NYSE:BIP) is trading at $35.38 per share. The company is trading at a volume of 32,811 shares. This is a sign that there will be less trading activity than there was yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 shows the proportion of assets that a company is financing through debt. The debt ratio for BIP is 71.6%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Rising 1.2%, Huaneng Power International, Inc (NYSE:HNP) is currently trading at $27.82 per share. At 21,469 shares, the company's volume so far today is 0.2 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. HNP's PEG ratio is 6.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Copano Energy (Nasdaq:CPNO) is trading at $32.84 per share, down 1.1%. The company's volume for the day so far is 61,868 shares. If a stock price moves on high volume, this means that the change is a significant one. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for CPNO is 53.4%, which is fairly high. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
Outperforming the market overall, the Utilities sector (XLU) is up 0.1% and its biggest movers so far today are:
| Company | Market Cap | Percentage Change |
| Atlas (NYSE:ATLS) | $1.81 billion | -1.7% |
| MGE Energy (Nasdaq:MGEE) | $1.23 billion | -1.6% |
| Crestwood Midstream (NYSE:CMLP) | $1.14 billion | +1.5% |
| ITC (NYSE:ITC) | $3.86 billion | -1.4% |
| Brookfield Infrastructure Partners (NYSE:BIP) | $5.02 billion | +1.2% |
| Huaneng Power International, Inc (NYSE:HNP) | $9.66 billion | +1.2% |
| Copano Energy (Nasdaq:CPNO) | $2.4 billion | -1.1% |
Atlas (NYSE:ATLS) is down 1.7% to reach $34.70 per share. The company's volume for the day so far is 52,082 shares. This is on pace to fall short of yesterday's volume of 220,523 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. ATLS has a D/E ratio of 186%, which is relatively high. This shows that the company's assets are financed primarily through debt. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.
Slipping 1.6%, MGE Energy (Nasdaq:MGEE) is currently trading at $52.59 per share. The company's volume for the day so far is 16,159 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. Valuation ratios include 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. 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. MGEE's stock is trading for more than its book value with a P/B ratio of 2.16. 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: Using The Price-To-Book Ratio To Evaluate Companies
Crestwood Midstream (NYSE:CMLP) is currently trading at $24.03 per share, a 1.5% increase. So far today, the company's volume is 51,193 shares. 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. 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. CMLP's dividend yield of 8.4% is on the high end. Companies with large dividends tend to cut them to preserve cash flow, so watch out that you don't end up with a stock that might not be worth owning. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Guide To Stock-Picking Strategies: Income Investing
ITC (NYSE:ITC) has fallen 1.4% and is currently trading at $73.97 per share. The company's volume is currently 68,960 shares for the day, 0.2 times the average daily volume. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ITC has a high P/S ratio of 4.51. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Increasing 1.2%, Brookfield Infrastructure Partners (NYSE:BIP) is trading at $35.38 per share. The company is trading at a volume of 32,811 shares. This is a sign that there will be less trading activity than there was yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 shows the proportion of assets that a company is financing through debt. The debt ratio for BIP is 71.6%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Rising 1.2%, Huaneng Power International, Inc (NYSE:HNP) is currently trading at $27.82 per share. At 21,469 shares, the company's volume so far today is 0.2 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. HNP's PEG ratio is 6.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Copano Energy (Nasdaq:CPNO) is trading at $32.84 per share, down 1.1%. The company's volume for the day so far is 61,868 shares. If a stock price moves on high volume, this means that the change is a significant one. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for CPNO is 53.4%, which is fairly high. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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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