Filed Under: ,
Tickers in this Article: JLL, WPPGY, URI, MCD, WPO, TSCO, AMZN
The market is having a bad day so far. The Nasdaq has decreased 1.9%; the S&P 500 has fallen 1.3%; and the Dow is down 1.1%.

The Services sector (IYC) is currently ahead of the overall market, down only 1.6%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Jones Lang LaSalle Incorporated (NYSE:JLL)$3.07 billion-4%
WPP PLC (ADR) (Nasdaq:WPPGY)$16.24 billion-3.9%
United Rentals, Inc. (NYSE:URI)$2.82 billion+3.1%
McDonald\'s (NYSE:MCD)$93.07 billion-2.7%
The Washington Post Company (NYSE:WPO)$2.75 billion-2.6%
Tractor Supply Company (Nasdaq:TSCO)$5.62 billion+2.6%
Amazon.com (Nasdaq:AMZN)$102.85 billion-2.3%
Software Summary: Finviz.com Stock Screener

After a decline of 4%, Jones Lang LaSalle (NYSE:JLL) has hit a share price of $67.35. The company is trading at a volume of 182,366 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. JLL's P/E ratio of 17.7 is above the industry average of 8.69. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio

Currently trading at $61.58 per share, WPP PLC (Nasdaq:WPPGY) has fallen 3.9%. So far today, the company's volume is 33,618 shares, one 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). WPPGY's PEG ratio is 1.18. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

After rising 3.1%, United Rentals (NYSE:URI) is currently trading at a share price of $31.34. The company is currently trading a volume of 2.3 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. URI's stock is trading for more than its book value with a P/B ratio of 2.08. 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

McDonald's (NYSE:MCD) is down 2.7% to reach $89.09 per share. The company's volume is currently 6.3 million shares for the day, one times its average over the past three months. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. Dividend yield for MCD is 3.1%. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Guide To Stock-Picking Strategies: Income Investing

Slipping 2.6%, Washington Post (NYSE:WPO) is currently trading at $352.01 per share. So far today, the company's volume is 5,936 shares. This is on pace to fall short of yesterday's volume of 21,507 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 price/sales ratio measures a company's stock market price by its revenues. WPO has a low P/S ratio of 0.69. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. 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.

Tractor Supply (Nasdaq:TSCO) has increased to a share price of $80.02, a 2.6% rise. At 688,237 shares, the company's volume so far today is consistent with its current daily average. A stock's volume conveys how excited investors are about it. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for TSCO is a low 39.5%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.

Amazon.com (Nasdaq:AMZN) is trading at $223.02 per share, down 2.3%. So far today, the company's volume is 3.6 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for AMZN is 188.7, above the industry average of 21.92. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: The P/E Ratio: A Good Market-Timing Indicator

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.

comments powered by Disqus

Trading Center