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National Grid plc and Other Utilities Stocks Making Big Moves on October 1, 2012
The market is currently up, with the Nasdaq increasing 0.7%, the S&P 500 climbing 1% and the Dow up 1.1%. 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.
The Utilities sector (XLU) is up 0.3%, underperforming the market overall. The biggest movers in the sector are currently:
Forex Broker Summary: Forex Capital Markets (FXCM)
NRG (NYSE:NRG) is currently trading at $21.86 per share, a 2.2% increase. This morning, the company is trading a volume of 1.2 million 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 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. NRG has a high capitalization ratio of 58.4%. 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.
Integrys Energy (NYSE:TEG) has risen 2% to hit a current price of $53.27 per share. At 215,838 shares, the company's volume so far today is in keeping with its current three-month average. 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 provide investors with an estimation, albeit a simplistic one, of the value of a 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. PEG ratio for TEG is 3.84. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Increasing 1.8%, Atlas (NYSE:ATLS) is trading at $35.17 per share. So far today, 56,330 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ATLS has a P/B ratio of 3.92 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Using The Price-To-Book Ratio To Evaluate Companies
National Grid plc (NYSE:NGG) is up 1.6% to reach a current price of $56.22 per share. The company's volume is currently 144,384 shares for the day, in keeping with its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. Dividend yield for NGG is 7.3%. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Guide To Stock-Picking Strategies: Income Investing
Kinder Morgan Energy (NYSE:KMP) has moved up 1.4% and is currently trading at $83.67 per share. So far today, the company's volume is 225,546 shares. 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 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. 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 KMP is a high 2.34. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Rising 1.4%, Enbridge Inc (NYSE:ENB) is currently trading at $39.58 per share. The company's volume for the day so far is 156,546 shares, 0.3 times the current three-month average. A stock's volume conveys how excited investors are about it. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ENB's debt ratio of 78% is fairly high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
After rising 1.4%, Edison (NYSE:EIX) is currently trading at a share price of $46.31. The company's volume is currently 587,297 shares. At this rate, trading activity will likely be down from yesterday when 1.8 million shares changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. 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. EIX has a high D/E ratio of 146%. 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 The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Utilities sector (XLU) is up 0.3%, underperforming the market overall. The biggest movers in the sector are currently:
| Company | Market Cap | Percentage Change |
| NRG (NYSE:NRG) | $4.87 billion | +2.2% |
| Integrys Energy (NYSE:TEG) | $4.09 billion | +2% |
| Atlas (NYSE:ATLS) | $1.77 billion | +1.8% |
| National Grid plc (NYSE:NGG) | $39.52 billion | +1.6% |
| Kinder Morgan Energy (NYSE:KMP) | $19.81 billion | +1.4% |
| Enbridge Inc (NYSE:ENB) | $31.13 billion | +1.4% |
| Edison (NYSE:EIX) | $14.89 billion | +1.4% |
NRG (NYSE:NRG) is currently trading at $21.86 per share, a 2.2% increase. This morning, the company is trading a volume of 1.2 million 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 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. NRG has a high capitalization ratio of 58.4%. 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.
Integrys Energy (NYSE:TEG) has risen 2% to hit a current price of $53.27 per share. At 215,838 shares, the company's volume so far today is in keeping with its current three-month average. 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 provide investors with an estimation, albeit a simplistic one, of the value of a 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. PEG ratio for TEG is 3.84. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Increasing 1.8%, Atlas (NYSE:ATLS) is trading at $35.17 per share. So far today, 56,330 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. ATLS has a P/B ratio of 3.92 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Kinder Morgan Energy (NYSE:KMP) has moved up 1.4% and is currently trading at $83.67 per share. So far today, the company's volume is 225,546 shares. 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 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. 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 KMP is a high 2.34. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Rising 1.4%, Enbridge Inc (NYSE:ENB) is currently trading at $39.58 per share. The company's volume for the day so far is 156,546 shares, 0.3 times the current three-month average. A stock's volume conveys how excited investors are about it. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ENB's debt ratio of 78% is fairly high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
After rising 1.4%, Edison (NYSE:EIX) is currently trading at a share price of $46.31. The company's volume is currently 587,297 shares. At this rate, trading activity will likely be down from yesterday when 1.8 million shares changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. 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. EIX has a high D/E ratio of 146%. 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 The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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