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Tickers in this Article: VRA, VC, NAV, TPX, DECK, RGR, PII
The Nasdaq has decreased 0.2%, the S&P 500 is trading down 0.4% and the Dow is down 0.6% on a bad morning for the market. 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.

The Consumer Cyclical sector (XLY) is down 0.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Vera Bradley (Nasdaq:VRA)$1.08 billion-5.5%
Visteon (NYSE:VC)$2.1 billion+4.4%
Navistar (NYSE:NAV)$1.71 billion-4.3%
Tempur-Pedic International (NYSE:TPX)$1.89 billion+2.6%
Deckers (Nasdaq:DECK)$1.88 billion-2.5%
Sturm, Ruger (NYSE:RGR)$835 million-2%
Polaris Industries (NYSE:PII)$5.21 billion-1.5%
Forex Broker Summary: Forex Capital Markets (FXCM)

Vera Bradley (Nasdaq:VRA) is down 5.5% to reach $25.11 per share. The company's volume for the day so far is 453,357 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. The P/E ratio for VRA is 15.9, above the industry average of 13.16. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

After an increase of 4.4%, Visteon (NYSE:VC) has reached a current price of $41.62. At 526,561 shares, the company's volume so far today is which is more trading activity than there was yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for VC is 0.27, which is relatively low. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.

After a decline of 4.3%, Navistar (NYSE:NAV) has hit a share price of $23.85. So far today, the company's volume is 601,813 shares. This is 0.6 times the 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The debt ratio for NAV is 104%, which is relatively high. As such, the company is highly leveraged and not highly liquid. 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.

Increasing 2.6%, Tempur-Pedic International (NYSE:TPX) is trading at $32.65 per share. At 279,920 shares, the company's volume so far today is 0.3 times the current daily average. The trading volume for a stock indicates the level of investor interest. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. TPX has a capitalization ratio of 101.8%, which is on the high end. 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. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Slipping 2.5%, Deckers (Nasdaq:DECK) is currently trading at $49.32 per share. This morning, the company is trading a volume of 522,326 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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. DECK has a PEG ratio of 0.9, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Sturm, Ruger (NYSE:RGR) has fallen 2% and is currently trading at $42.73 per share. This morning, 278,282 shares have been traded, which is likely to result in less activity than yesterday's volume of 709,587 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 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. RGR's stock is trading for more than its book value with a P/B ratio of 5.03. This may be a sign that the company is overvalued. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

At $74.97, Polaris Industries (NYSE:PII) has slipped 1.5%. So far today, 138,658 shares have changed hands. This is 0.2 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. PII has a P/E ratio of 20.4, high compared to the industry average of 6.22. 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: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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