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PSE&G and Other Utilities Stocks Making Big Moves on September 5, 2012
The market is currently up, with the Nasdaq increasing 0.2%, the S&P 500 rising 0.2% and the Dow moving up 0.3%. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
The Utilities sector (XLU) is down 0.2% on a good day for the market overall. The biggest movers in the sector so far are:
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Huaneng Power International, Inc (NYSE:HNP) is up 6.2% to reach a current price of $28.91 per share. The company's volume is currently 60,676 shares for the day, one times the average daily volume. The trading volume for a stock indicates the level of investor interest. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 10.21, HNP's P/E ratio of 28.5 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
Slipping 4%, TransAlta Corporation (NYSE:TAC) is currently trading at $14.31 per share. So far today, the company's volume is 112,316 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. The P/B ratio for TAC is 1.73, indicating that the stock is trading for more 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. 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: How Buybacks Warps The Price-To-Book Ratio
Calpine (NYSE:CPN) has moved up 2.9% and is currently trading at $18.43 per share. With four million shares changing hands so far today, the company's volume is 1.1 times its average over the past three months. 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. 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 debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for CPN is 291%. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Companhia de Saneamento Basico (NYSE:SBS) is at $87.28 per share after an increase of 2.5%. So far today, 94,444 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt ratio is calculated by dividing total liabilities by total assets. SBS' debt ratio is 56.5%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
After an increase of 2.1%, Companhia Energetica Minas Gerais (NYSE:CIG) has reached a current price of $17.23. So far today, the company's volume is 963,107 shares, 0.3 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The capitalizion ratio of 25.5% is on the low end. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Crestwood Midstream (NYSE:CMLP) is down 1.5% to reach $24.08 per share. This morning, the company is trading a volume of 34,766 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for CMLP is 33.9, above the industry average of 32.53. 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. 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
Currently trading at $31.30 per share, PSE&G (NYSE:PEG) has fallen 1.2%. The company's volume is currently 791,818 shares for the day, 0.3 times its current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. PEG's PEG ratio is 6.21. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
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 Utilities sector (XLU) is down 0.2% on a good day for the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Huaneng Power International, Inc (NYSE:HNP) | $9.56 billion | +6.2% |
| TransAlta Corporation (NYSE:TAC) | $3.43 billion | -4% |
| Calpine (NYSE:CPN) | $8.36 billion | +2.9% |
| Companhia de Saneamento Basico (NYSE:SBS) | $9.7 billion | +2.5% |
| Companhia Energetica Minas Gerais (NYSE:CIG) | $11.51 billion | +2.1% |
| Crestwood Midstream (NYSE:CMLP) | $1.17 billion | -1.5% |
| PSE&G (NYSE:PEG) | $16.03 billion | -1.2% |
Huaneng Power International, Inc (NYSE:HNP) is up 6.2% to reach a current price of $28.91 per share. The company's volume is currently 60,676 shares for the day, one times the average daily volume. The trading volume for a stock indicates the level of investor interest. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. Compared to the industry average of 10.21, HNP's P/E ratio of 28.5 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Find P/E And PEG Ratios
Slipping 4%, TransAlta Corporation (NYSE:TAC) is currently trading at $14.31 per share. So far today, the company's volume is 112,316 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. The P/B ratio for TAC is 1.73, indicating that the stock is trading for more 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. 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: How Buybacks Warps The Price-To-Book Ratio
Calpine (NYSE:CPN) has moved up 2.9% and is currently trading at $18.43 per share. With four million shares changing hands so far today, the company's volume is 1.1 times its average over the past three months. 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. 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 debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for CPN is 291%. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
After an increase of 2.1%, Companhia Energetica Minas Gerais (NYSE:CIG) has reached a current price of $17.23. So far today, the company's volume is 963,107 shares, 0.3 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. The capitalizion ratio of 25.5% is on the low end. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Crestwood Midstream (NYSE:CMLP) is down 1.5% to reach $24.08 per share. This morning, the company is trading a volume of 34,766 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for CMLP is 33.9, above the industry average of 32.53. 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. 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
Currently trading at $31.30 per share, PSE&G (NYSE:PEG) has fallen 1.2%. The company's volume is currently 791,818 shares for the day, 0.3 times its current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. PEG's PEG ratio is 6.21. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
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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