The market is doing well so far today. The Nasdaq has increased 0.6%; the S&P 500 has risen 0.5%; and the Dow has moved up 0.6%. 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.
Outperforming the market overall, the Consumer Cyclical sector (XLY) is up 0.6% and its biggest movers so far today are:
|Company||Market Cap||Percentage Change|
|Movado Group (NYSE:MOV)||$697.9 million||+4.9%|
|Crocs (Nasdaq:CROX)||$1.47 billion||+4.4%|
|Oshkosh (NYSE:OSK)||$2.32 billion||-4%|
|Westport Innovations Inc (Nasdaq:WPRT)||$1.97 billion||-3.3%|
|Tesla Motors (Nasdaq:TSLA)||$3.24 billion||-3.2%|
|Polo Ralph Lauren (NYSE:RL)||$14.26 billion||+2.3%|
|NIKE (NYSE:NKE)||$34.74 billion||+1.6%|
Forex Broker Summary: Forex Capital Markets (FXCM)
Movado Group (NYSE:MOV) is at $29.12 per share after an increase of 4.9%. This morning, the company is trading a volume of 107,188 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). Compared to the industry average of 11.81, MOV's P/E ratio of 17.6 is quite high. 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. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Understanding The P/E Ratio
After an increase of 4.4%, Crocs (Nasdaq:CROX) has reached a current price of $17.03. At 1.3 million shares, the company's volume so far today is 0.9 times the average volume over the last three months. Volume is used to evaluate how meaningful the price movement of a stock is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The P/B ratio for CROX is 2.63, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies
After a decline of 4%, Oshkosh (NYSE:OSK) has hit a share price of $24.28. So far today, the company's volume is 332,742 shares. This is on pace to fall short of yesterday's volume of one million shares. The trading volume for a stock indicates the level of investor interest. 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. A price/sales ratio is derived by dividing stock market price by company sales. OSK's P/S ratio of 0.23 is fairly low. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Westport Innovations Inc (Nasdaq:WPRT) is trading at $34.70 per share, down 3.3%. At 968,037 shares, the company's volume so far today is 1.2 times its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. The debt ratio for WPRT is a low 36%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Slipping 3.2%, Tesla Motors (Nasdaq:TSLA) is currently trading at $29.76 per share. So far today, 549,983 shares have changed hands. 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. 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. TSLA has a capitalization ratio of 87.4%, which is on the high end. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Polo Ralph Lauren (NYSE:RL) has risen 2.3% to hit a current price of $160.01 per share. The company's volume is currently 493,088 shares for the day, consistent with its average over the last three months. Volume is an important indicator because it indicates how significant a price shift is. 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/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. RL's P/B ratio of 4.2 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
NIKE (NYSE:NKE) is currently trading at $96.95 per share, a 1.6% increase. The company is trading at a volume of one 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. NKE's dividend yield of 1.5% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Investment Valuation Ratios: Dividend Yield
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.