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Tickers in this Article: CWEI, CXO, EC, CLR, EVEP, EOG, XCO
The market is having a bad day so far. The Nasdaq is trading down 2%; the S&P 500 has slipped 1.7%; and the Dow has decreased 1.3%.

The Oil and Gas Operations sector (DIG) is currently lagging behind the overall market, down 5.3%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Clayton Williams Energy, Inc. (Nasdaq:CWEI)$548.1 million-6.6%
Concho Resources Inc. (NYSE:CXO)$8.43 billion-5.2%
Ecopetrol S.A. (ADR) (NYSE:EC)$1.79 billion-4.6%
Continental Resources, Inc. (NYSE:CLR)$11.77 billion-4.5%
EV Energy Partners, L.P. (Nasdaq:EVEP)$2 billion-4.5%
EOG Resources (NYSE:EOG)$23.62 billion-4.1%
EXCO Resources Inc (NYSE:XCO)$1.46 billion+3.6%
Software Summary: Stock Screener

Slipping 6.6%, Clayton Williams Energy (Nasdaq:CWEI) is currently trading at $42.10 per share. The company is currently trading a volume of 20,686 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Margin ratios highlight companies that are worth further examination. The gross profit margin for CWEI is 67.1%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. CWEI has an operating profit margin of 24.6%. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. The company's net profit margin is 25.8%.

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. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. CWEI's P/B ratio of 1.46 shows that its share price is higher 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: Investment Valuation Ratios: Price/Book Value Ratio

Concho Resources (NYSE:CXO) has decreased to $76.89 per share, a 5.2% fall. The company's volume for the day so far is 563,685 share, 0.4 times the current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. CXO has a relatively high gross profit margin of 81.3%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Compared with its gross profit margin, CXO's operating profit margin of 17.2% and net profit margin of 28.4% are high.

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. The P/S ratio for CXO is 5.61, which is relatively high. This could be a good sign if the share price increases. 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.

Ecopetrol S.A (NYSE:EC) is down 4.6% to reach $53.64 per share. This morning, the company's volume is 535,852 shares. This is 0.8 times the current daily average. If a stock price moves on high volume, this means that the change is a significant one. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. The gross profit margin for EC is 53.2%. Value investors, investors in distressed securities, and junk bond investors will probably pay more attention to the operating margin ratio. EC's operating profit margin of 41.6% is low relative to its gross profit margin. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Net margin is 23.6%.

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 debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for EC is 54.6%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Currently trading at $62.05 per share, Continental Resources (NYSE:CLR) has fallen 4.5%. At 513,607 shares, the company's volume so far today is which is less activity than yesterday's volume of 1.7 million shares. A stock's volume conveys how excited investors are about it. Margin analysis is a great way to understand the profitability of companies. CLR's gross profit margin of 87.4% is fairly high. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. CLR's operating margin of 34.3% and net margin of 33.2% are high relative to its gross margin.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). CLR's P/E ratio of 18.5 is under the industry average of 20.79. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: Investment Valuation Ratios: Price/Earnings Ratio

EV Energy Partners (Nasdaq:EVEP) is currently trading at a share price of $45.06, a 4.5% decline. This morning, the company is trading a volume of 207,202 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for EVEP is 63.5%. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. The operating profit margin for EVEP is 5.8%, high compared to its gross profit margin. A high operating margin indicates that a company has a greater ability to pay its fixed costs, which means that the company has greater financial flexibility and a greater margin of error should its business decline. Net profit margin compares net income with sales. Relative to its gross profit margin, the company has a low net profit margin of 59.3%. This is a potential cause for concern, as companies with low profit margins can get wiped out in a downturn.

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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for EVEP is 62%. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

At $84.03, EOG (NYSE:EOG) has slipped 4.1%. At 1.2 million shares, the company's volume so far today is 0.4 times its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. EOG's gross profit margin of 84.3% is on the high side. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Operating margin for EOG is 19.9% and net margin is 11.6%, both high relative to its gross margin.

Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. EOG has a low capitalization ratio of 27.8%. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

EXCO Resources (NYSE:XCO) has moved up 3.6% and is currently trading at $6.99 per share. So far today, the company's volume is 2.4 million shares. This is 0.4 times its current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. XCO has a high gross profit margin of 75.1%. This may indicate that the company is over-pricing its products and/or services. The operating and net profit margins for XCO are both negative. This is because the company reported a net loss and net operating loss in the most recent quarter.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for XCO is 1.19, indicating that the stock is trading for more than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

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

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