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Tickers in this Article: CIT, KB, SHG, CHCO, MET, WRLD, BSAC
The market is having a bad day so far. The Nasdaq has decreased 0.7%; the S&P 500 has fallen 0.2%; and the Dow is down 0.2%. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

Despite a bad day for the market overall so far, the Financial sector (XLF) is up 0.3% and its biggest movers are currently:
CompanyMarket CapPercentage Change
CIT (NYSE:CIT)$7.82 billion+3.2%
KB Financial Group, Inc (NYSE:KB)$14.07 billion-2.9%
Shinhan Financial Group Co., Ltd (NYSE:SHG)$16.31 billion-2.3%
City Holding (Nasdaq:CHCO)$524.9 million+1.8%
MetLife (NYSE:MET)$37.04 billion+1.7%
World (Nasdaq:WRLD)$928.3 million-1.7%
Banco Santander-Chile (NYSE:BSAC)$13.4 billion-1.7%
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Rising 3.2%, CIT (NYSE:CIT) is currently trading at $40.19 per share. The company is currently trading a volume of 989,611 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. CIT's capitalization ratio of 74.7% is relatively high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Slipping 2.9%, KB Financial Group, Inc (NYSE:KB) is currently trading at $35.38 per share. With 47,756 shares changing hands so far today, the company's volume is 0.3 times the current three-month 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. KB has a D/E ratio of 184%, which is relatively high. This shows that the company's assets are financed primarily through debt. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Shinhan Financial Group Co., Ltd (NYSE:SHG) is currently trading at a share price of $67.25, a 2.3% decline. So far today, 9,268 shares of the company's stock have changed hands. This is on pace to fall short of yesterday's volume of 43,757 shares. 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. 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/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. SHG has a PEG ratio of 0.63, 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.

City Holding (Nasdaq:CHCO) has increased to a share price of $36.07, a 1.8% rise. So far today, the company's volume is 12,643 shares, 0.2 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 is one of the more common methods of determining whether a stock is fairly valued. CHCO's P/B ratio of 1.67 shows that its share price is higher than its book value. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

MetLife (NYSE:MET) is at $35.48 per share after an increase of 1.7%. So far today, the company's volume is 4.2 million 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. 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. Dividend yield for MET is 2.1%. 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

Falling 1.7%, World (Nasdaq:WRLD) is currently at a share price of $69.83. At 91,580 shares, the company's volume so far today is 0.7 times its current three-month average. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. WRLD's P/E ratio of 10.6 is consistent with the industry average. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Profit With The Power Of Price-To-Earnings

Currently trading at $72.66 per share, Banco Santander-Chile (NYSE:BSAC) has fallen 1.7%. So far today, the company's volume is 122,686 shares. This is on pace to reach yesterday's trading volume of 231,546 shares. A stock's volume conveys how excited investors are about it. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. BSAC has a high debt ratio of 92%. As such, the company is highly leveraged and not highly liquid. 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 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.

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