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Tickers in this Article: FSLR, CAVM, ASMI, NXPI, EZCH, KLAC, SWKS
The Nasdaq is down 0.4%, the S&P 500 has decreased 0.8% and the Dow has slipped 0.8% on a bad morning for the market.

The Semiconductors sector (XLK) is down 0.5%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
First Solar (Nasdaq:FSLR)$1.28 billion+25.6%
Cavium Inc (Nasdaq:CAVM)$1.37 billion+8.7%
ASM International N.V. (Nasdaq:ASMI)$2.06 billion-6.3%
NXP Semiconductors NV (Nasdaq:NXPI)$5.47 billion-2.3%
EZchip Semiconductor Ltd. (Nasdaq:EZCH)$1.01 billion-2.3%
KLA-Tencor (Nasdaq:KLAC)$8.5 billion+1.5%
Skyworks Solutions Inc (Nasdaq:SWKS)$5.34 billion-1.5%
Broker Summary: Fidelity Online Brokerage

First Solar (Nasdaq:FSLR) is trading at $18.59 per share, a significant rise of 25.6%. The company's volume is currently 15.2 million shares for the day, 4.1 times its average over the past three months. If a stock price moves on high volume, this means that the change is a significant one. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. FSLR's stock is trading for less than its book value as can be seen from it's P/B value of 0.5. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Cavium (Nasdaq:CAVM) is currently trading at $29.94 per share, a 8.7% increase. The company's volume is currently 3.5 million shares. Yesterday's volume was only 1.4 million shares. Volume indicates the level of interest that investors have in a company at its current price. 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. CAVM has a high P/S ratio of 6.16. 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.

After a decline of 6.3%, ASM International (Nasdaq:ASMI) has hit a share price of $34.84. So far today, the company's volume is 17,016 shares, 1.2 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. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. ASMI's debt ratio is 58.2%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

NXP (Nasdaq:NXPI) is currently trading at a share price of $21.55, a 2.3% decline. So far today, the company's volume is 338,390 shares. 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. 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 measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. NXPI's capitalization ratio of 78.8% is relatively high. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. 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.

EZchip (Nasdaq:EZCH) has fallen 2.3% and is currently trading at $35.17 per share. With 75,623 shares changing hands so far today, the company's volume is 0.3 times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. EZCH's P/E ratio of 90.0 is above the industry average of 28.32. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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

KLA-Tencor (Nasdaq:KLAC) is up 1.5% to reach a current price of $51.55 per share. So far today, 1.2 million shares of the company's stock have changed hands. Volume is an important indicator because it indicates how significant a price shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. KLAC's debt-equity ratio of 23% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Slipping 1.5%, Skyworks Solutions (Nasdaq:SWKS) is currently trading at $27.76 per share. At 1.3 million shares, the company's volume so far today is 0.2 times the average daily volume. 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 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. SWKS has a P/B ratio of 3.06 which shows that its share price is higher 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. 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: Using The Price-To-Book Ratio To Evaluate Companies

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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