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Maxim Integrated Products and More Big Movers in Semiconductors on August 27, 2012
The market is doing well so far today. The Nasdaq has moved up 0.5%; the S&P 500 has climbed 0.3%; and the Dow has risen 0.1%.
Underperforming the market overall, the Semiconductors sector (XLK) is up 0.5%, and these are its current biggest movers:
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Universal (Nasdaq:PANL) has fallen 9.1% and is currently trading at $38.85 per share. The company is currently trading a volume of 2.7 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. A price/sales ratio is derived by dividing stock market price by company sales. PANL has a high P/S ratio of 20.08. 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.
GT Advanced Technologies (Nasdaq:GTAT) is trading at $6.04 per share, down 4.7%. So far today, 1.9 million shares have changed hands, with trading activity in keeping with yesterday's lighter than yesterday's volume of four million shares. 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. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. 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. The debt ratio for GTAT is 67.7%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Silicon Motion Technology Corp (Nasdaq:SIMO) is currently trading at a share price of $15.84, a 4.2% decline. This morning, the company is trading a volume of 566,350 shares. This is 1.6 times its average volume over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). SIMO's P/E ratio of 4.4 falls below the industry average of 13.66. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
At $27.03, Maxim Integrated Products (Nasdaq:MXIM) has slipped 4%. So far today, the company's volume is 1.7 million shares, 0.8 times the current daily average. Volume indicates the level of interest that investors have in a company at its current price. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. MXIM has a PEG ratio of 2.11. 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.
Increasing 3.8%, First Solar (Nasdaq:FSLR) is trading at $25.70 per share. This morning, the company is trading a volume of 3.8 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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, 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. The P/B ratio for FSLR is 0.66 because the stock is trading for less than its book value. 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Slipping 3.6%, InvenSense (NYSE:INVN) is currently trading at $12.95 per share. At 555,265 shares, the company's volume so far today is. 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for INVN is a high 5.89. This could be a good sign if the share price increases. 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.
Rising 3.3%, Ultratech (Nasdaq:UTEK) is currently trading at $33.80 per share. The company is currently trading a volume of 45,675 shares. This 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio shows the proportion of assets that a company is financing through debt. UTEK has a debt ratio of 18.1%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
Underperforming the market overall, the Semiconductors sector (XLK) is up 0.5%, and these are its current biggest movers:
| Company | Market Cap | Percentage Change |
| Universal (Nasdaq:PANL) | $1.98 billion | -9.1% |
| GT Advanced Technologies (Nasdaq:GTAT) | $752.4 million | -4.7% |
| Silicon Motion Technology Corp (Nasdaq:SIMO) | $515.1 million | -4.2% |
| Maxim Integrated Products (Nasdaq:MXIM) | $8.22 billion | -4% |
| First Solar (Nasdaq:FSLR) | $2.15 billion | +3.8% |
| InvenSense (NYSE:INVN) | $1.1 billion | -3.6% |
| Ultratech (Nasdaq:UTEK) | $864.8 million | +3.3% |
Universal (Nasdaq:PANL) has fallen 9.1% and is currently trading at $38.85 per share. The company is currently trading a volume of 2.7 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. A price/sales ratio is derived by dividing stock market price by company sales. PANL has a high P/S ratio of 20.08. 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.
GT Advanced Technologies (Nasdaq:GTAT) is trading at $6.04 per share, down 4.7%. So far today, 1.9 million shares have changed hands, with trading activity in keeping with yesterday's lighter than yesterday's volume of four million shares. 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. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. 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. The debt ratio for GTAT is 67.7%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Silicon Motion Technology Corp (Nasdaq:SIMO) is currently trading at a share price of $15.84, a 4.2% decline. This morning, the company is trading a volume of 566,350 shares. This is 1.6 times its average volume over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). SIMO's P/E ratio of 4.4 falls below the industry average of 13.66. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
Increasing 3.8%, First Solar (Nasdaq:FSLR) is trading at $25.70 per share. This morning, the company is trading a volume of 3.8 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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, 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. The P/B ratio for FSLR is 0.66 because the stock is trading for less than its book value. 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Slipping 3.6%, InvenSense (NYSE:INVN) is currently trading at $12.95 per share. At 555,265 shares, the company's volume so far today is. 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for INVN is a high 5.89. This could be a good sign if the share price increases. 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.
Rising 3.3%, Ultratech (Nasdaq:UTEK) is currently trading at $33.80 per share. The company is currently trading a volume of 45,675 shares. This 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio shows the proportion of assets that a company is financing through debt. UTEK has a debt ratio of 18.1%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
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. 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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