Filed Under: ,
Tickers in this Article: JHX, ESLT, NC, LNN, MIDD, TKR, JOY
The Nasdaq has fallen 0.3%, the S&P 500 has declined 0.4% and the Dow is trading down 0.5%, marking 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 0.7%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
James Hardie Industries SE (ADR) (NYSE:JHX)$3.85 billion-5.3%
Elbit Systems Ltd. (ADR) (Nasdaq:ESLT)$1.39 billion-4.8%
NACCO Industries, Inc. (NYSE:NC)$882.7 million-3%
Lindsay Corporation (NYSE:LNN)$938.9 million-2.9%
The Middleby Corporation (Nasdaq:MIDD)$2.13 billion+2.7%
The Timken Company (NYSE:TKR)$4.01 billion-2.7%
Joy Global Inc. (NYSE:JOY)$6.06 billion-2.6%
Investopedia Markets: Explore the best one-stop source for financial news

James Hardie Industries SE (NYSE:JHX) has decreased to $41.58 per share, a 5.3% fall. So far today, the company's volume is 3,500 shares, 0.9 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. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. JHX's debt ratio of 94.5% is fairly high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Elbit Systems Ltd (Nasdaq:ESLT) is trading at $31.25 per share, down 4.8%. So far today, the company's volume is 3,300 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. Dividend yield measures the income that a stock will generate for an investor. Dividend yield for ESLT is 3.7%. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing

Falling 3%, NACCO Industries (NYSE:NC) is currently at a share price of $102.10. So far today, the company's volume is 6,970 shares, 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 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. NC has a fairly low capitalization ratio of 25.2%. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

At $71.72, Lindsay (NYSE:LNN) has slipped 2.9%. The company's volume is currently 33,161 shares. This is on pace to fall short of yesterday's volume of 102,588 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. 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 debt-equity (D/E) ratio is a leverage ratio. The debt-equity ratio of 2% is relatively low. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Middleby (Nasdaq:MIDD) is at $116.91 per share after an increase of 2.7%. At 49,235 shares, the company's volume so far today is 0.3 times the current daily average. The trading volume for a stock indicates the level of investor interest. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). MIDD has a P/E ratio of 18.6, high compared to the industry average of 14.3. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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

Slipping 2.7%, Timken (NYSE:TKR) is currently trading at $40.05 per share. So far today, 524,302 shares have changed hands. A stock's volume conveys how excited investors are about it. 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. 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. The P/B ratio for TKR is 1.69, indicating that the stock is trading for more than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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 2.6%, Joy Global (NYSE:JOY) has hit a share price of $55.75. At 574,843 shares, the company's volume so far today is 0.3 times its current three-month average. If a stock price moves on high volume, this means that the change is a significant one. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. JOY has a PEG ratio of 0.49, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

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.

comments powered by Disqus

Trading Center