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Lennar and More Big Movers in Capital Goods on October 3, 2012
The Nasdaq is trading up 0.6%, the S&P 500 has increased 0.4% and the Dow is up 0.3%, 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 up 0.5%, underperforming the market overall. The biggest movers in the sector are currently:
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SPX (NYSE:SPW) is at $67.50 per share after an increase of 5.5%. So far today, the company's volume is 654,308 shares, 1.1 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. SPW has a capitalization ratio of 42.4%. 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.
After an increase of 5.1%, Lennar (NYSE:LEN) has reached a current price of $36.78. The company is currently trading a volume of 3.4 million 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. LEN has a low dividend yield of 0.5%. If you are an income investor, this stock may not be attractive to you. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn
Lennar (NYSE:LEN.B) is up 5% to reach a current price of $28.40 per share. With 41,076 shares changing hands so far today, the company's volume is 1.1 times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. The dividend yield for LEN.B is 0.6%, which is on the low end. This may indicate that the company's stock is overpriced. 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: Guide To Stock-Picking Strategies: Income Investing
After rising 4.4%, Ryland Group (NYSE:RYL) is currently trading at a share price of $31.13. The company's volume for the day so far is 313,340 shares. This is on pace to fall short of yesterday's volume of 1.5 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for RYL is 1.12, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
M.D.C. Holdings (NYSE:MDC) is currently trading at $39.98 per share, a 3.3% increase. So far today, the company's volume is 273,851 shares, 0.3 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. 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 debt ratio is calculated by dividing total liabilities by total assets. MDC's debt ratio is 53.1%. 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.
Toll Brothers, Inc (NYSE:TOL) has increased to a share price of $34.53, a 3.3% rise. This morning, the company is trading a volume of 1.3 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 compares the total liabilities for a company to its total shareholder equity. The D/E ratio for TOL is 73%. 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.
National Presto Industries (NYSE:NPK) has risen 2.7% to hit a current price of $76.75 per share. At 6,736 shares, the company's volume so far today is 0.3 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. NPK's stock is trading for more than its book value with a P/B ratio of 1.68. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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.
The Capital Goods sector (XLI) is up 0.5%, underperforming the market overall. The biggest movers in the sector are currently:
| Company | Market Cap | Percentage Change |
| SPX (NYSE:SPW) | $3.25 billion | +5.5% |
| Lennar (NYSE:LEN) | $6.62 billion | +5.1% |
| Lennar (NYSE:LEN.B) | $846.4 million | +5% |
| Ryland Group (NYSE:RYL) | $1.33 billion | +4.4% |
| M.D.C. Holdings (NYSE:MDC) | $1.86 billion | +3.3% |
| Toll Brothers, Inc (NYSE:TOL) | $5.62 billion | +3.3% |
| National Presto Industries (NYSE:NPK) | $514.2 million | +2.7% |
SPX (NYSE:SPW) is at $67.50 per share after an increase of 5.5%. So far today, the company's volume is 654,308 shares, 1.1 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. SPW has a capitalization ratio of 42.4%. 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.
After an increase of 5.1%, Lennar (NYSE:LEN) has reached a current price of $36.78. The company is currently trading a volume of 3.4 million 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. LEN has a low dividend yield of 0.5%. If you are an income investor, this stock may not be attractive to you. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Dividend Yield For The Downturn
Lennar (NYSE:LEN.B) is up 5% to reach a current price of $28.40 per share. With 41,076 shares changing hands so far today, the company's volume is 1.1 times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. The dividend yield for LEN.B is 0.6%, which is on the low end. This may indicate that the company's stock is overpriced. 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: Guide To Stock-Picking Strategies: Income Investing
M.D.C. Holdings (NYSE:MDC) is currently trading at $39.98 per share, a 3.3% increase. So far today, the company's volume is 273,851 shares, 0.3 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. 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 debt ratio is calculated by dividing total liabilities by total assets. MDC's debt ratio is 53.1%. 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.
Toll Brothers, Inc (NYSE:TOL) has increased to a share price of $34.53, a 3.3% rise. This morning, the company is trading a volume of 1.3 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 compares the total liabilities for a company to its total shareholder equity. The D/E ratio for TOL is 73%. 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.
National Presto Industries (NYSE:NPK) has risen 2.7% to hit a current price of $76.75 per share. At 6,736 shares, the company's volume so far today is 0.3 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. NPK's stock is trading for more than its book value with a P/B ratio of 1.68. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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.
by
Investopedia Staff
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