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LyondellBasell and Other Big Movers In Basic Materials on September 4, 2012
The morning has been bad for the market. The Nasdaq has decreased 0.8%; the S&P 500 has slipped 0.5%; and the Dow is down 0.7%. The basic materials sector is the category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. This sector includes the mining and refining of metals, chemical producers and forestry products. The basic materials sector is sensitive to changes in the business cycle. Because the sector supplies materials for construction, it depends on a strong economy. This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as gold or other metals, is largely demand driven.
The Basic Materials sector (XLB) is currently lagging behind the overall market, down 1.3%, and its current biggest movers are:
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Cliffs Natural Resources (NYSE:CLF) is down 4.2% to reach $34.33 per share. The company is currently trading a volume of 3.1 million 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. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CLF has a debt ratio of 58.6%. 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.
Silver Standard Resources Inc (Nasdaq:SSRI) is up 4% to reach a current price of $15.42 per share. The company's volume for the day so far is 701,705 shares, in keeping with its current three-month average. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio is a leverage ratio. SSRI has a debt-equity ratio of 13%, which is on the low side. 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Endeavour Silver Corp (NYSE:EXK) has risen 3.7% and is currently trading at $9.22 per share. So far today, 783,903 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. 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. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). EXK's P/E ratio of 29.6 is above the industry average of 1.63. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Slipping 2.9%, LyondellBasell (NYSE:LYB) is currently trading at $47.42 per share. The company's volume is currently 5.4 million shares for the day, 1.4 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. 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. 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. The capitalizion ratio of 27.3% is on the low end. Low leverage is a significant balance sheet strength, a sign of a less risky 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 $47.36, Haynes International (Nasdaq:HAYN) has slipped 2.9%. The company's volume for the day so far is 31,167 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. 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/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. HAYN's P/B ratio of 1.9 shows that its share price is higher 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
POSCO (NYSE:PKX) is currently trading at a share price of $79.48, a 2.5% decline. The company's volume is currently 29,282 shares for the day, 0.2 times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock 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. PKX has a low dividend yield of 1.1%. This could indicate that that the stock is overpriced or that future dividends might be higher. 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: Due Diligence On Dividends
Falling 2%, Terra Nitrogen Company (NYSE:TNH) is currently at a share price of $215.59. The company is trading at a volume of 9,978 shares. This is on pace to fall short of yesterday's volume of 36,019 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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/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. The P/S ratio for TNH is 4.97, which is relatively high. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
The Basic Materials sector (XLB) is currently lagging behind the overall market, down 1.3%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Cliffs Natural Resources (NYSE:CLF) | $5.11 billion | -4.2% |
| Silver Standard Resources Inc (Nasdaq:SSRI) | $1.2 billion | +4% |
| Endeavour Silver Corp (NYSE:EXK) | $881.7 million | +3.7% |
| LyondellBasell (NYSE:LYB) | $28.08 billion | -2.9% |
| Haynes International (Nasdaq:HAYN) | $599 million | -2.9% |
| POSCO (NYSE:PKX) | $25.18 billion | -2.5% |
| Terra Nitrogen Company (NYSE:TNH) | $4.07 billion | -2% |
Cliffs Natural Resources (NYSE:CLF) is down 4.2% to reach $34.33 per share. The company is currently trading a volume of 3.1 million 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. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CLF has a debt ratio of 58.6%. 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.
Silver Standard Resources Inc (Nasdaq:SSRI) is up 4% to reach a current price of $15.42 per share. The company's volume for the day so far is 701,705 shares, in keeping with its current three-month average. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio is a leverage ratio. SSRI has a debt-equity ratio of 13%, which is on the low side. 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 percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Endeavour Silver Corp (NYSE:EXK) has risen 3.7% and is currently trading at $9.22 per share. So far today, 783,903 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. 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. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). EXK's P/E ratio of 29.6 is above the industry average of 1.63. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
Slipping 2.9%, LyondellBasell (NYSE:LYB) is currently trading at $47.42 per share. The company's volume is currently 5.4 million shares for the day, 1.4 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. 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. 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. The capitalizion ratio of 27.3% is on the low end. Low leverage is a significant balance sheet strength, a sign of a less risky 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 $47.36, Haynes International (Nasdaq:HAYN) has slipped 2.9%. The company's volume for the day so far is 31,167 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. 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/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. HAYN's P/B ratio of 1.9 shows that its share price is higher 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
POSCO (NYSE:PKX) is currently trading at a share price of $79.48, a 2.5% decline. The company's volume is currently 29,282 shares for the day, 0.2 times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock 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. PKX has a low dividend yield of 1.1%. This could indicate that that the stock is overpriced or that future dividends might be higher. 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: Due Diligence On Dividends
Falling 2%, Terra Nitrogen Company (NYSE:TNH) is currently at a share price of $215.59. The company is trading at a volume of 9,978 shares. This is on pace to fall short of yesterday's volume of 36,019 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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/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. The P/S ratio for TNH is 4.97, which is relatively high. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
by
Investopedia Staff
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