Filed Under: ,
Tickers in this Article: NC, TXI, AVAV, JOY, TGI, IEX, GDI
The Nasdaq has declined 0.7%, the S&P 500 is trading down 0.2% and the Dow has fallen 0.2% on a bad morning for the market. 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 down 0.2%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
NACCO Industries (NYSE:NC)$943.7 million+4.5%
Texas Industries (NYSE:TXI)$1.19 billion+3.7%
AeroVironment (Nasdaq:AVAV)$511.4 million+2.5%
Joy Global (NYSE:JOY)$6.29 billion+2.4%
Triumph Group (NYSE:TGI)$3.09 billion-2.2%
IDEX (NYSE:IEX)$3.53 billion-2%
Gardner Denver (NYSE:GDI)$2.96 billion+1.8%
Software Summary: Finviz.com Stock Screener

After an increase of 4.5%, NACCO Industries (NYSE:NC) has reached a current price of $117.53. So far today, the company's volume is 48,516 shares, 1.2 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock 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. The price/sales ratio measures a company's stock market price by its revenues. NC's P/S ratio of 0.29 is fairly low. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Increasing 3.7%, Texas Industries (NYSE:TXI) is trading at $43.88 per share. This morning, the company is trading a volume of 187,437 shares. If a stock price moves on high volume, this means that the change is a significant one. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for TXI is 48.5%. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

AeroVironment (Nasdaq:AVAV) is currently trading at $23.54 per share, a 2.5% increase. The company's volume is currently 66,954 shares for the day, in keeping with the average volume 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. 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/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for AVAV is consistent with the industry average at 2.13. 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.

Joy Global (NYSE:JOY) has risen 2.4% to hit a current price of $60.82 per share. The company's volume is currently 1.3 million shares. This is on pace to reach yesterday's trading volume of 2.5 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. 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. JOY has a P/B ratio of 2.58 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Investment Valuation Ratios: Price/Book Value Ratio

At $60.62, Triumph Group (NYSE:TGI) has slipped 2.2%. So far today, the company's volume is 71,956 shares, 0.2 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. Dividend yield measures the income that a stock will generate for an investor. TGI has a dividend yield of 0.3%, which is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Dividend Yield For The Downturn

IDEX (NYSE:IEX) has fallen 2% and is currently trading at $41.47 per share. The company is currently trading a volume of 190,037 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 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. IEX's P/E ratio of 17.5 is above the industry average of 13.97. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. 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: Understanding The P/E Ratio

Gardner Denver (NYSE:GDI) has increased to a share price of $61.51, a 1.8% rise. The company's volume for the day so far is 154,161 shares, 0.4 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. GDI has a low debt ratio of 47.2%. 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.

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.

comments powered by Disqus

Trading Center