Filed Under: ,
Tickers in this Article: TAP, SAM, MNST, NUS, KFT, EL, HAIN
On a good day for the market, the Nasdaq has risen 0.7%, the S&P 500 has climbed 1% and the Dow has moved up 1.1%.

The Consumer/Non-Cyclical sector (XLP) is up 1%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Molson Coors (NYSE:TAP)$7.04 billion-3.3%
Boston Beer Co (NYSE:SAM)$1.45 billion-3.2%
Monster (Nasdaq:MNST)$9.54 billion+3.1%
Nu Skin Enterprises (NYSE:NUS)$2.33 billion+2.5%
Kraft (Nasdaq:KFT)$73.38 billion+2.4%
Estee Lauder (NYSE:EL)$14.63 billion+2.4%
Hain Celestial Group (Nasdaq:HAIN)$2.83 billion+2.3%
Investopedia Markets: Explore the best one-stop source for financial news

At $43.56, Molson Coors (NYSE:TAP) has slipped 3.3%. The company's volume is currently 1.4 million shares. Yesterday's volume was only 1.1 million shares. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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). TAP's PEG ratio is 3.19. 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 a decline of 3.2%, Boston Beer Co (NYSE:SAM) has hit a share price of $108.38. At 108,134 shares, the company's volume so far today is 1.3 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. SAM has a fairly low capitalization ratio of 0.3%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Rising 3.1%, Monster (Nasdaq:MNST) is currently trading at $55.73 per share. This morning, the company is trading a volume of 1.2 million shares. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. MNST has a high P/S ratio of 6.5. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Nu Skin Enterprises (NYSE:NUS) has risen 2.5% to hit a current price of $39.80 per share. The company's volume for the day so far is 721,528 shares, 0.4 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 ratio shows the proportion of assets that a company is financing through debt. The debt ratio for NUS is 50%. 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.

Kraft (Nasdaq:KFT) is currently trading at $42.34 per share, a 2.4% increase. So far today, the company's volume is 7.9 million shares. This is on pace to reach yesterday's trading volume of 14 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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/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. KFT's stock is trading for more than its book value with a P/B ratio of 2.08. 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: How Buybacks Warps The Price-To-Book Ratio

Estee Lauder (NYSE:EL) has risen 2.4% and is currently trading at $63.03 per share. So far today, the company's volume is 968,184 shares, consistent with its current daily average. 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 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). EL's P/E ratio of 28.5 is above the industry average of 18.5. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio

Hain Celestial Group (Nasdaq:HAIN) has increased to a share price of $64.47, a 2.3% rise. So far today, the company's volume is 234,537 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. 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). HAIN has a PEG ratio of 2.43, 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 On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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