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Tickers in this Article: SPW, TKR, TNC, MLM, JOY, ATK, NC
It's been a good morning for the market. The Nasdaq has risen 0.8%; the S&P 500 has increased 0.3%; and the Dow has moved up 0.3%. 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.

Underperforming the market overall, the Capital Goods sector (XLI) is up 0.5%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
SPX Corporation (NYSE:SPW)$3.22 billion+3%
The Timken Company (NYSE:TKR)$3.91 billion+2.5%
Tennant Company (NYSE:TNC)$799.9 million-2.1%
Martin Marietta Materials, Inc. (NYSE:MLM)$3.48 billion+2.1%
Joy Global Inc. (NYSE:JOY)$5.77 billion+1.8%
Alliant Techsystems Inc. (NYSE:ATK)$1.65 billion+1.7%
NACCO Industries, Inc. (NYSE:NC)$889.3 million-1.2%
Software Summary: Finviz.com Stock Screener

SPX (NYSE:SPW) has risen 3% to hit a current price of $65.38 per share. So far today, the company's volume is 130,291 shares, 0.3 times the current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. SPW has a capitalization ratio of 42.4%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

After rising 2.5%, Timken (NYSE:TKR) is currently trading at a share price of $41.22. So far today, the company's volume is 530,398 shares. At this rate, trading activity will likely be down from yesterday when 1.4 million shares changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt ratio shows the proportion of assets that a company is financing through debt. TKR has a debt ratio of 47.8%, 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.

Falling 2.1%, Tennant (NYSE:TNC) is currently at a share price of $42.09. The company's volume is currently 14,244 shares for the day, 0.2 times its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. 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). TNC's PEG ratio of 0.88 is in line 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.

Martin Marietta Materials (NYSE:MLM) is up 2.1% to reach a current price of $77.46 per share. The company is currently trading a volume of 147,938 shares. The trading volume for a stock indicates the level of investor interest. 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, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. The P/B ratio for MLM is 2.58, indicating that the stock is trading for more than its book value. 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. 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

Increasing 1.8%, Joy Global (NYSE:JOY) is trading at $55.46 per share. With 601,886 shares changing hands so far today, the company's volume is 0.3 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. JOY has a low dividend yield of 1.3%. If you are an income investor, this stock may not be attractive to you. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Due Diligence On Dividends

Alliant Techsystems (NYSE:ATK) is at $51.24 per share after an increase of 1.7%. So far today, 69,388 shares of the company's stock have changed hands. This is on pace to fall short of yesterday's volume of 215,679 shares. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios allow the investor to make a quick determination as to a company's investment value. A price/sales ratio is derived by dividing stock market price by company sales. ATK has a P/S ratio of 0.36, on the low end. 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.

NACCO Industries (NYSE:NC) has decreased to $104.70 per share, a 1.2% fall. The company's volume is currently 3,485 shares for the day, 0.1 times the average daily volume. 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. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. NC's P/E ratio of 7.0 is under the industry average of 23.12. A low P/E ratio may indicate that the market expects relatively slower earnings growth. 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: Investment Valuation Ratios: Price/Earnings Ratio

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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