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POSCO and Other Big Movers In Basic Materials on September 28, 2012
The market is having a bad day so far: the Nasdaq has fallen 0.8%; the S&P 500 is trading down 0.7%; and the Dow has declined 0.7%. The basic materials sector is the category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. This sector includes the mining and refining of metals, chemical producers and forestry products. The basic materials sector is sensitive to changes in the business cycle. Because the sector supplies materials for construction, it depends on a strong economy. This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as gold or other metals, is largely demand driven.
The Basic Materials sector (XLB) is down 0.9%, underperforming the market overall. The current biggest movers in the sector are:
Broker Summary: Fidelity Online Brokerage
Currently trading at $34.69 per share, Koppers Holdings (NYSE:KOP) has fallen 3%. So far today, 25,574 shares have changed hands, while it was 79,184 shares yesterday. Volume indicates the level of interest that investors have in a company at its current price. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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 13.45, KOP's P/E ratio of 16.7 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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: The P/E Ratio: A Good Market-Timing Indicator
Falling 2.9%, Cliffs Natural Resources (NYSE:CLF) is currently at a share price of $38.66. The company's volume for the morning is 2.1 million shares. This is 0.2 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The D/E ratio for CLF is 67%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Reliance Steel (NYSE:RS) is currently trading at a share price of $51.64, a 2.7% decline. The company's volume for the day so far is 93,812 shares, 0.2 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. RS' capitalization ratio is 31.1%. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
Carpenter (NYSE:CRS) has fallen 2.1% and is currently trading at $52.14 per share. So far today, the company's volume is 117,154 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. CRS' P/B ratio of 2.48 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
Domtar Corp (NYSE:UFS) is trading at $77.56 per share, down 1.6%. This morning, 92,987 shares have been traded, lighter than yesterday's volume of 474,903 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. UFS' dividend yield is 2.3%. 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: Due Diligence On Dividends
At $67.53, Deltic (NYSE:DEL) has slipped 1.5%. The company's volume for the day so far is 5,000 shares. This is 0.1 times the current daily average. A stock's volume conveys how excited investors are about it. 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. The P/S ratio for DEL is a high 6.03. 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.
POSCO (NYSE:PKX) is down 1.5% to reach $81.50 per share. With 41,944 shares changing hands so far today, the company's volume is 0.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for PKX is 51.5%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
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.
The Basic Materials sector (XLB) is down 0.9%, underperforming the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Koppers Holdings (NYSE:KOP) | $742.7 million | -3% |
| Cliffs Natural Resources (NYSE:CLF) | $5.68 billion | -2.9% |
| Reliance Steel (NYSE:RS) | $3.99 billion | -2.7% |
| Carpenter (NYSE:CRS) | $2.92 billion | -2.1% |
| Domtar Corp (NYSE:UFS) | $3.35 billion | -1.6% |
| Deltic (NYSE:DEL) | $868.2 million | -1.5% |
| POSCO (NYSE:PKX) | $25.57 billion | -1.5% |
Currently trading at $34.69 per share, Koppers Holdings (NYSE:KOP) has fallen 3%. So far today, 25,574 shares have changed hands, while it was 79,184 shares yesterday. Volume indicates the level of interest that investors have in a company at its current price. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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 13.45, KOP's P/E ratio of 16.7 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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: The P/E Ratio: A Good Market-Timing Indicator
Falling 2.9%, Cliffs Natural Resources (NYSE:CLF) is currently at a share price of $38.66. The company's volume for the morning is 2.1 million shares. This is 0.2 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The D/E ratio for CLF is 67%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Reliance Steel (NYSE:RS) is currently trading at a share price of $51.64, a 2.7% decline. The company's volume for the day so far is 93,812 shares, 0.2 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. RS' capitalization ratio is 31.1%. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
Carpenter (NYSE:CRS) has fallen 2.1% and is currently trading at $52.14 per share. So far today, the company's volume is 117,154 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. CRS' P/B ratio of 2.48 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio
Domtar Corp (NYSE:UFS) is trading at $77.56 per share, down 1.6%. This morning, 92,987 shares have been traded, lighter than yesterday's volume of 474,903 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 dividend yield is calculated by dividing a company's dividends per share by its stock price. UFS' dividend yield is 2.3%. 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: Due Diligence On Dividends
At $67.53, Deltic (NYSE:DEL) has slipped 1.5%. The company's volume for the day so far is 5,000 shares. This is 0.1 times the current daily average. A stock's volume conveys how excited investors are about it. 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. The P/S ratio for DEL is a high 6.03. 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.
POSCO (NYSE:PKX) is down 1.5% to reach $81.50 per share. With 41,944 shares changing hands so far today, the company's volume is 0.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for PKX is 51.5%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
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.
by
Investopedia Staff
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