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Mohawk Industries, Inc. and Other Consumer Cyclical Stocks Making Big Moves
The Nasdaq has fallen 0.2%, the S&P 500 has declined 0.1% and the Dow is trading down 0.1%, marking a bad morning for the market. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.
The Consumer Cyclical sector (XLY) is down 0.5%, underperforming the market overall. The current biggest movers in the sector are:
Forex Broker Summary: UFXMarkets
Falling 4.5%, Mohawk Industries (NYSE:MHK) is currently at a share price of $68.36. The company's volume for the day so far is 456,444 shares, one times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. MHK has a capitalization ratio of 31.8%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Fossil (Nasdaq:FOSL) is trading at $73.92 per share, down 3.7%. This morning, the company's volume is 287,275 shares. This is 0.2 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. FOSL's stock is trading for more than its book value with a P/B ratio of 4.08. 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. 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
At $42.99, Deckers (Nasdaq:DECK) has slipped 3.7%. At 663,479 shares, the company's volume so far today is lighter than yesterday's volume of 7.6 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. DECK's PEG ratio of 0.72 is in line with the industry average. 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.
LeapFrog Enterprises (NYSE:LF) is at $11.60 per share after an increase of 3%. The company is currently trading a volume of 342,109 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). LF has a P/E ratio of 22.5, high compared to the industry average of 3.23. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: The P/E Ratio: A Good Market-Timing Indicator
After a decline of 2.8%, Tempur-Pedic International (NYSE:TPX) has hit a share price of $30.45. So far today, the company's volume is 600,517 shares, 0.2 times the average volume over the last three months. 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 investment value can be 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. A price/sales ratio is derived by dividing stock market price by company sales. TPX's P/S ratio of 1.02 is on the high side. 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.
Dunkin' Brands Group (Nasdaq:DNKN) is up 2.4% to reach a current price of $30.84 per share. The company's volume for the day so far is 1.3 million shares. This is 0.6 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. DNKN's debt ratio of 76.2% is fairly high. 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.
Brunswick (NYSE:BC) has increased to a share price of $22.02, a 2.3% rise. The company's volume is currently 595,967 shares for the day, while it was 2.1 million shares yesterday. Volume is used to evaluate how meaningful the price movement of a stock 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. BC has a D/E ratio of 845%, which is relatively high. This shows that the company's assets are financed primarily through debt. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
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. 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.
The Consumer Cyclical sector (XLY) is down 0.5%, underperforming the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Mohawk Industries, Inc. (NYSE:MHK) | $4.93 billion | -4.5% |
| Fossil, Inc. (Nasdaq:FOSL) | $4.76 billion | -3.7% |
| Deckers Outdoor Corp (Nasdaq:DECK) | $1.72 billion | -3.7% |
| LeapFrog Enterprises, Inc. (NYSE:LF) | $751.5 million | +3% |
| Tempur-Pedic International Inc. (NYSE:TPX) | $1.99 billion | -2.8% |
| Dunkin\' Brands Group Inc (Nasdaq:DNKN) | $3.63 billion | +2.4% |
| Brunswick Corporation (NYSE:BC) | $1.92 billion | +2.3% |
Falling 4.5%, Mohawk Industries (NYSE:MHK) is currently at a share price of $68.36. The company's volume for the day so far is 456,444 shares, one times its average over the past three months. Volume is an important indicator because it indicates how significant a price shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. MHK has a capitalization ratio of 31.8%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Fossil (Nasdaq:FOSL) is trading at $73.92 per share, down 3.7%. This morning, the company's volume is 287,275 shares. This is 0.2 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. FOSL's stock is trading for more than its book value with a P/B ratio of 4.08. 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. 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
At $42.99, Deckers (Nasdaq:DECK) has slipped 3.7%. At 663,479 shares, the company's volume so far today is lighter than yesterday's volume of 7.6 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. DECK's PEG ratio of 0.72 is in line with the industry average. 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.
After a decline of 2.8%, Tempur-Pedic International (NYSE:TPX) has hit a share price of $30.45. So far today, the company's volume is 600,517 shares, 0.2 times the average volume over the last three months. 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 investment value can be 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. A price/sales ratio is derived by dividing stock market price by company sales. TPX's P/S ratio of 1.02 is on the high side. 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.
Dunkin' Brands Group (Nasdaq:DNKN) is up 2.4% to reach a current price of $30.84 per share. The company's volume for the day so far is 1.3 million shares. This is 0.6 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. DNKN's debt ratio of 76.2% is fairly high. 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.
Brunswick (NYSE:BC) has increased to a share price of $22.02, a 2.3% rise. The company's volume is currently 595,967 shares for the day, while it was 2.1 million shares yesterday. Volume is used to evaluate how meaningful the price movement of a stock 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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. BC has a D/E ratio of 845%, which is relatively high. This shows that the company's assets are financed primarily through debt. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
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. 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.
by
Investopedia Staff
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