So far today, the Nasdaq has climbed 0.1%, the S&P 500 remains relatively unchanged and the Dow is up 0.1%. 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 trading up 0.1% overall, and these are the biggest movers in the sector so far:
|Company||Market Cap||Percentage Change|
|Makita Corporation (Nasdaq:MKTAY)||$5.14 billion||+2.6%|
|MasTec (NYSE:MTZ)||$1.49 billion||+2.4%|
|James Hardie Industries SE (NYSE:JHX)||$4.09 billion||-2.3%|
|DXP Enterprises (Nasdaq:DXPE)||$700.9 million||-2%|
|Chart Industries (Nasdaq:GTLS)||$2.22 billion||-1.8%|
|Chicago Bridge & Iron Company (NYSE:CBI)||$3.95 billion||+1.7%|
|Quanex Building (NYSE:NX)||$712.6 million||+1.7%|
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After an increase of 2.6%, Makita Corporation (Nasdaq:MKTAY) has reached a current price of $38.83. The company's volume is currently 84,697 shares. Yesterday's volume was only 2,563 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. The debt-equity (D/E) ratio is a leverage ratio. MKTAY's debt-equity ratio of 1% is on the low end. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
MasTec (NYSE:MTZ) has risen 2.4% to hit a current price of $20.16 per share. At 221,756 shares, the company's volume so far today is 0.4 times its current daily average. Volume is an important indicator because it indicates how significant a price shift is. 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. 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. MTZ has a capitalization ratio of 36.4%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
James Hardie Industries SE (NYSE:JHX) has decreased to $45.71 per share, a 2.3% fall. This morning, the company is trading a volume of 3,377 shares. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for JHX is a high 2.85. 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 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.
DXP Enterprises (Nasdaq:DXPE) is currently trading at a share price of $48.47, a 2% decline. The company's volume for the day so far is 26,697 shares, 0.3 times the average volume over the last three months. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. DXPE's P/E ratio of 18.1 is above the industry average of 14.04. This could mean that the market is expecting big things over the next few months or years. 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: The P/E Ratio: A Good Market-Timing Indicator
Currently trading at $72.76 per share, Chart Industries (Nasdaq:GTLS) has fallen 1.8%. The company is trading at a volume of 55,077 shares. This is on pace to fall short of yesterday's volume of 177,690 shares. If a stock price moves on high volume, this means that the change is a significant one. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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). GTLS has a PEG ratio of 1.71, 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.
Chicago Bridge & Iron Company (NYSE:CBI) has moved up 1.7% and is currently trading at $41.50 per share. So far today, the company's volume is 1.2 million shares, 0.7 times the current daily average. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. CBI's stock is trading for more than its book value with a P/B ratio of 3.27. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Quanex Building (NYSE:NX) is up 1.7% to reach a current price of $19.62 per share. So far today, the company's volume is 47,126 shares. A stock's volume conveys how excited investors are about it. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is calculated by dividing a company's dividends per share by its stock price. NX's dividend yield of 0.8% is fairly low. If you are an income investor, this stock may not be attractive to you. Simply comparing the level of dividends that two stocks pay does not give a true reflection of which security is more attractive, so investors calculate the dividend yield in order to standardize dividend payments. SEE: Due Diligence On Dividends
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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.