So far today, the Nasdaq has risen 0.2%, the S&P 500 remains relatively unchanged and the Dow has been relatively flat. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.
The Energy sector (XLE) is trading up 0.1% overall, and these are the biggest movers in the sector so far:
|Company||Market Cap||Percentage Change|
|InterOil Corporation (USA) (NYSE:IOC)||$4.02 billion||-6.8%|
|Matador Resources Co (NYSE:MTDR)||$556.7 million||-5.5%|
|Natural Resource Partners LP (NYSE:NRP)||$2.31 billion||-3.3%|
|Tesoro Logistics LP (NYSE:TLLP)||$642.8 million||+3.1%|
|Bill Barrett Corporation (NYSE:BBG)||$1.06 billion||+2.8%|
|Approach Resources Inc. (Nasdaq:AREX)||$970.8 million||+2.2%|
|Oasis Petroleum Inc. (NYSE:OAS)||$2.76 billion||+2.2%|
Broker Summary: Charles Schwab Online Brokerage
Slipping 6.8%, InterOil Corporation (NYSE:IOC) is currently trading at $77.71 per share. This morning, the company is trading a volume of 1.1 million shares. 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. 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. IOC has a debt ratio of 27.4%, which is fairly low. 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.
Matador (NYSE:MTDR) is currently trading at a share price of $9.48, a 5.5% decline. The company's volume for the day so far is 369,375 shares, 2.1 times its average over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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/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. MTDR's stock is trading for more than its book value with a P/B ratio of 1.27. 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: How Buybacks Warps The Price-To-Book Ratio
After a decline of 3.3%, Natural Resource (NYSE:NRP) has hit a share price of $21.09. So far today, 196,581 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular 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. Dividend yield for NRP is 10.1%, which is fairly high. 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. 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
Tesoro (NYSE:TLLP) is up 3.1% to reach a current price of $42.83 per share. So far today, the company's volume is 60,603 shares, 0.7 times the average daily volume. 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. A price/sales ratio is derived by dividing stock market price by company sales. TLLP's P/S ratio of 4.55 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.
Bill (NYSE:BBG) is at $22.58 per share after an increase of 2.8%. So far today, 585,688 shares have changed hands. 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 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. Compared to the industry average of 17.42, BBG's P/E ratio of 46.0 is quite high. This could mean that the market is expecting big things over the next few months or years. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Approach Resources (Nasdaq:AREX) has moved up 2.2% and is currently trading at $29.59 per share. At 138,831 shares, the company's volume so far today is 0.3 times the average volume over the last three months. Volume indicates the level of interest that investors have in a company at its current price. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. 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. AREX has a low capitalization ratio of 23.2%. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Oasis Petroleum (NYSE:OAS) is currently trading at $30.25 per share, a 2.2% increase. The company's volume for the day so far is 333,530 shares. At this rate, trading activity will likely be down from yesterday when 893,440 shares changed hands. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. OAS has a debt ratio of 64.2%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.