The morning has been good for the market. The Nasdaq is up 2.2%; the S&P 500 is trading up 2%; and the Dow has increased 1.8%.
Underperforming the market overall, the Consumer/Non-Cyclical sector (XLP) is up 1.7%, and these are its current biggest movers:
|Company||Market Cap||Percentage Change|
|Blyth, Inc. (NYSE:BTH)||$576.4 million||+10.5%|
|Fortune Brands (NYSE:BEAM)||$9.52 billion||+4.4%|
|Green Mountain Coffee Roasters Inc. (Nasdaq:GMCR)||$3.52 billion||-4.1%|
|Estee Lauder Cos (NYSE:EL)||$19.78 billion||+4%|
|J&J Snack Foods Corp. (Nasdaq:JJSF)||$1.08 billion||+3.8%|
|Anheuser-Busch InBev NV (ADR) (NYSE:BUD)||$126.83 billion||+3.6%|
|Procter & Gamble (NYSE:PG)||$174.02 billion||+3.5%|
Broker Summary: TD Ameritrade Thinkorswim
Blyth (NYSE:BTH) has soared 10.5% to reach a current price of $37 per share. The company's volume is currently 394,850 shares for the day, 2.5 times the current three-month average. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. The P/E ratio for BTH is 112.3, above the industry average of 14.73. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. 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
Fortune (NYSE:BEAM) has risen 4.4% and is currently trading at $63.06 per share. This morning, the company's volume is 284,090 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 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. BEAM's capitalization ratio is 27.2%, which is relatively low. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Falling 4.1%, Green Mountain Coffee Roasters (Nasdaq:GMCR) is currently at a share price of $21.72. So far today, the company's volume is 4.2 million shares, which is likely to result in less activity than yesterday's volume of 34.5 million shares. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. GMCR's PEG ratio of 0.27 is in line with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Increasing 4%, Estee Lauder (NYSE:EL) is trading at $52.89 per share. So far today, 524,435 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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/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. EL has a P/B ratio of 7.25 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio
J&J Snack (Nasdaq:JJSF) has risen 3.8% to hit a current price of $58.99 per share. At 5,364 shares, the company's volume so far today is 0.1 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for JJSF is 0.9%, which is on the low end. This could indicate that that the stock is overpriced or that future dividends might be higher. 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: Guide To Stock-Picking Strategies: Income Investing
Anheuser-Busch InBev NV (NYSE:BUD) is at $81.86 per share after an increase of 3.6%. The company's volume for the morning is 1.1 million shares. This is in keeping with its current daily average. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. BUD has a high P/S ratio of 2.51. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Procter & Gamble (NYSE:PG) is currently trading at $65.74 per share, a 3.5% increase. This morning, 6.1 million shares have been traded,. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. PG's debt ratio 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. 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.