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Tickers in this Article: FOSL, TTM, DECK, ALV, SWK, WHR, RL
The Nasdaq has increased 1.1%, the S&P 500 has climbed 0.6% and the Dow is trading up 0.4%, marking 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 up 0.6%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
Fossil (Nasdaq:FOSL)$5.11 billion+8.7%
Tata Motors Limited (NYSE:TTM)$2.31 billion+5.9%
Deckers (Nasdaq:DECK)$1.69 billion+4.6%
Autoliv (NYSE:ALV)$6.02 billion+3.9%
Stanley Black & Decker, Inc (NYSE:SWK)$12.36 billion+3.5%
Whirlpool (NYSE:WHR)$6.28 billion+2.4%
Polo Ralph Lauren (NYSE:RL)$14.6 billion+2.2%
Broker Summary: Fidelity Online Brokerage

After an increase of 8.7%, Fossil (Nasdaq:FOSL) has reached a current price of $91.30. The company's volume is currently 869,525 shares for the day, 1.1 times the current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. The P/S ratio for FOSL is 1.76, which is relatively high. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Increasing 5.9%, Tata Motors Limited (NYSE:TTM) is trading at $25.37 per share. So far today, 1.2 million shares have changed hands. 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 debt ratio shows the proportion of assets that a company is financing through debt. TTM has a high debt ratio of 70.2%. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Deckers (Nasdaq:DECK) is up 4.6% to reach a current price of $47.69 per share. The company's volume is currently 1.2 million shares for the day, 0.9 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. 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). DECK's P/E ratio of 10.1 is under the industry average of 29.19. A low P/E ratio may indicate that the market expects relatively slower earnings growth. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Rising 3.9%, Autoliv (NYSE:ALV) is currently trading at $65.61 per share. So far today, 407,924 shares of the company's stock have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. 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. ALV has a low debt-equity ratio of 18%. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. 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.

Stanley Black & Decker, Inc (NYSE:SWK) has risen 3.5% to hit a current price of $76.10 per share. At 723,939 shares, the company's volume so far today is in keeping with the average volume over the past three months. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. SWK's capitalization ratio is 29.9%, which is relatively low. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. 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.

Whirlpool (NYSE:WHR) is at $82.86 per share after an increase of 2.4%. The company is currently trading a volume of 580,714 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. 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 calculated by dividing the current stock price by the company's book value per share. WHR has a P/B ratio of 1.53 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. 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: Using The Price-To-Book Ratio To Evaluate Companies

After rising 2.2%, Polo Ralph Lauren (NYSE:RL) is currently trading at a share price of $163.80. The company's volume is currently 389,014 shares for the day, 0.4 times its current daily average. If a stock price moves on high volume, this means that the change is a significant one. 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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. RL's dividend yield of 1% is fairly low. A company with a low dividend yield may be a safer investment in the long run. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Investment Valuation Ratios: Dividend Yield

The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.

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