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Tickers in this Article: NRG, SBS, CPNO, HNP, CPN, EXC, NGG
The market is on the rise this morning. The Nasdaq has risen 0.3%; the S&P 500 has moved up 0.1%; and the Dow is trading up 0.2%. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.

Outperforming the market overall, the Utilities sector (XLU) is up 0.5% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
NRG (NYSE:NRG)$5.09 billion-3.2%
Companhia de Saneamento Basico (NYSE:SBS)$8.73 billion+3.2%
Copano Energy (Nasdaq:CPNO)$2.34 billion-2%
Huaneng Power International, Inc (NYSE:HNP)$10.13 billion+1.8%
Calpine (NYSE:CPN)$8.3 billion-1.5%
Exelon (NYSE:EXC)$29.76 billion+1.4%
National Grid plc (NYSE:NGG)$39 billion+1.2%
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NRG (NYSE:NRG) is currently trading at a share price of $21.63, a 3.2% decline. So far today, 2.6 million shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 compares the total liabilities for a company to its total shareholder equity. NRG's D/E ratio of 141% is on the high side. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Rising 3.2%, Companhia de Saneamento Basico (NYSE:SBS) is currently trading at $79.07 per share. With 226,943 shares changing hands so far today, the company's volume is consistent with its current three-month average. 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. 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 price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. SBS' PEG ratio is 1.37. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Slipping 2%, Copano Energy (Nasdaq:CPNO) is currently trading at $31.68 per share. The company's volume is currently 63,008 shares. This is a sign that there will be less trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. 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. 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. CPNO has a P/B ratio of 3.87 which 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: How Buybacks Warps The Price-To-Book Ratio

Huaneng Power International, Inc (NYSE:HNP) has risen 1.8% to hit a current price of $29.33 per share. So far today, the company's volume is 42,011 shares, 0.7 times the current daily average. The trading volume for a stock indicates the level of investor interest. 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. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for HNP is 0.9%, which is on the low end. This may indicate that the company's stock is overpriced. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Investment Valuation Ratios: Dividend Yield

After a decline of 1.5%, Calpine (NYSE:CPN) has hit a share price of $17.52. The company is currently trading a volume of 1.3 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CPN has a debt ratio of 78.4%, which is on the high side. 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. 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.

After rising 1.4%, Exelon (NYSE:EXC) is currently trading at a share price of $35.37. The company's volume for the day so far is 2.7 million shares, in keeping with its 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. 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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for EXC is a high 1.61. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

National Grid plc (NYSE:NGG) has increased to a share price of $55.32, a 1.2% rise. The company is trading at a volume of 82,030 shares. This is on pace to fall short of yesterday's volume of 273,459 shares. Volume is an important indicator because it indicates how significant a price shift is. 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. 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. NGG's capitalization ratio of 69% is relatively high. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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