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Tickers in this Article: HEI, BECN, HEI.A, FAST, TDG, RSTI, IR
On a good day for the market, the Nasdaq is up 0.6%, the S&P 500 has moved up 0.5% and the Dow has climbed 0.6%. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.

The Capital Goods sector (XLI) is up 0.5%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
HEICO (NYSE:HEI)$2 billion-3.5%
Beacon Roofing Supply (Nasdaq:BECN)$1.29 billion+3.1%
HEICO (NYSE:HEI.A)$790.9 million-2.9%
Fastenal (Nasdaq:FAST)$12.96 billion+1.8%
TransDigm Group (NYSE:TDG)$7.03 billion+1.8%
Rofin-Sinar (Nasdaq:RSTI)$627.5 million-1.7%
Ingersoll-Rand (NYSE:IR)$14.3 billion+1.6%
Forex Broker Summary: Forex Capital Markets (FXCM)

After a decline of 3.5%, HEICO (NYSE:HEI) has hit a share price of $36.56. So far today, the company's volume is 123,525 shares. This is in keeping with the average volume over the past three months. If a stock price moves on high volume, this means that the change is a significant one. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. The capitalizion ratio of 20.6% 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.

Beacon Roofing Supply (Nasdaq:BECN) is currently trading at $28.23 per share, a 3.1% increase. So far today, the company's volume is 149,806 shares, 0.3 times the current daily average. The trading volume for a stock indicates the level of investor 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. BECN's P/E ratio of 15.3 is consistent with the industry average. 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: Understanding The P/E Ratio

Slipping 2.9%, HEICO (NYSE:HEI.A) is currently trading at $30.64 per share. This morning, the company is trading a volume of 16,564 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. HEI.A has a dividend yield of 0.4%, which is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Investment Valuation Ratios: Dividend Yield

Fastenal (Nasdaq:FAST) is at $44.53 per share after an increase of 1.8%. At 762,489 shares, the company's volume so far today is. 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 is calculated by dividing total liabilities by total assets. FAST has a low debt ratio of 13.5%. 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Increasing 1.8%, TransDigm Group (NYSE:TDG) is trading at $138.97 per share. So far today, 114,394 shares have changed hands. This is 0.3 times the average volume over the last three months. 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. 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. TDG has a high P/S ratio of 4.34. 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.

Rofin-Sinar (Nasdaq:RSTI) is currently trading at a share price of $21.61, a 1.7% decline. So far today, the company's volume is 48,559 shares, 0.2 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. RSTI has a fairly low capitalization ratio of 1.3%. 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.

After an increase of 1.6%, Ingersoll-Rand (NYSE:IR) has reached a current price of $47.14. The company is currently trading a volume of 642,973 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. IR has a P/E ratio of 18.1, high compared to the industry average of 13.68. 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

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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