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Onyx Pharmaceuticals Among Healthcare's Biggest Movers on August 21, 2012
The Nasdaq has moved little, the S&P 500 has moved up 0.3% and the Dow has climbed 0.2% after the morning's trading. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
The Healthcare sector (XLV) has risen 0.3% overall, and these are the biggest movers in the sector so far:
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Onyx Pharmaceuticals (Nasdaq:ONXX) has risen 5.4% to hit a current price of $71.45 per share. The company's volume for the day so far is 791,585 shares, in keeping 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. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ONXX's debt ratio of 48.2% is on the low side. 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.
After an increase of 4.2%, Acadia Healthcare Company (Nasdaq:ACHC) has reached a current price of $19.56. This morning, the company is trading a volume of 77,202 shares. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. ACHC has a high P/S ratio of 2.22. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Emeritus (NYSE:ESC) is currently trading at $20.50 per share, a 4.1% increase. So far today, 28,900 shares have changed hands,. Volume is used to evaluate how meaningful the price movement of a stock is. 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 price/book value ratio is calculated by dividing the current stock price by the company's book value per share. ESC's stock is trading for more than its book value with a P/B ratio of 3.78. 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: Investment Valuation Ratios: Price/Book Value Ratio
Questcor Pharmaceuticals (Nasdaq:QCOR) has risen 4.1% and is currently trading at $40.22 per share. This morning, the company's volume is 642,663 shares. This is in keeping with its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). QCOR's P/E ratio of 18.8 is under the industry average of 292.89. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: The P/E Ratio: A Good Market-Timing Indicator
Increasing 3.1%, Pharmacyclics (Nasdaq:PCYC) is trading at $62.98 per share. At 197,149 shares, the company's volume so far today is 0.3 times its current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for PCYC is a low 38.1%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.
Auxilium Pharmaceuticals (Nasdaq:AUXL) has decreased to $23.28 per share, a 3.1% fall. The company's volume for the day so far is 269,078 shares. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for AUXL is a high 4.52. This could be a good sign if the share price increases. 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.
Currently trading at $38.89 per share, Centene (NYSE:CNC) has fallen 2.5%. This morning, 324,752 shares have been traded, which is likely to result in less activity than yesterday's volume of 2.7 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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. CNC has a debt-equity ratio of 43%, which is on the low side. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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. 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 Healthcare sector (XLV) has risen 0.3% overall, and these are the biggest movers in the sector so far:
| Company | Market Cap | Percentage Change |
| Onyx Pharmaceuticals (Nasdaq:ONXX) | $4.41 billion | +5.4% |
| Acadia Healthcare Company (Nasdaq:ACHC) | $783.3 million | +4.2% |
| Emeritus (NYSE:ESC) | $887.3 million | +4.1% |
| Questcor Pharmaceuticals (Nasdaq:QCOR) | $2.31 billion | +4.1% |
| Pharmacyclics (Nasdaq:PCYC) | $4.22 billion | +3.1% |
| Auxilium Pharmaceuticals (Nasdaq:AUXL) | $1.18 billion | -3.1% |
| Centene (NYSE:CNC) | $2.06 billion | -2.5% |
Onyx Pharmaceuticals (Nasdaq:ONXX) has risen 5.4% to hit a current price of $71.45 per share. The company's volume for the day so far is 791,585 shares, in keeping 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. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. ONXX's debt ratio of 48.2% is on the low side. 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.
After an increase of 4.2%, Acadia Healthcare Company (Nasdaq:ACHC) has reached a current price of $19.56. This morning, the company is trading a volume of 77,202 shares. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. ACHC has a high P/S ratio of 2.22. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Emeritus (NYSE:ESC) is currently trading at $20.50 per share, a 4.1% increase. So far today, 28,900 shares have changed hands,. Volume is used to evaluate how meaningful the price movement of a stock is. 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 price/book value ratio is calculated by dividing the current stock price by the company's book value per share. ESC's stock is trading for more than its book value with a P/B ratio of 3.78. 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: Investment Valuation Ratios: Price/Book Value Ratio
Increasing 3.1%, Pharmacyclics (Nasdaq:PCYC) is trading at $62.98 per share. At 197,149 shares, the company's volume so far today is 0.3 times its current three-month average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for PCYC is a low 38.1%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.
Auxilium Pharmaceuticals (Nasdaq:AUXL) has decreased to $23.28 per share, a 3.1% fall. The company's volume for the day so far is 269,078 shares. A stock's volume conveys how excited investors are about it. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for AUXL is a high 4.52. This could be a good sign if the share price increases. 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.
Currently trading at $38.89 per share, Centene (NYSE:CNC) has fallen 2.5%. This morning, 324,752 shares have been traded, which is likely to result in less activity than yesterday's volume of 2.7 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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. CNC has a debt-equity ratio of 43%, which is on the low side. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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. 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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