The market is doing well so far today. The Nasdaq has increased 1%; the S&P 500 is up 0.6%; and the Dow is trading up 0.5%.
Outperforming the market overall, the Oil and Gas Operations sector (DIG) is up 1.4% and its biggest movers so far today are:
|Company||Market Cap||Percentage Change|
|Venoco, Inc. (NYSE:VQ)||$585.7 million||+16.3%|
|Clayton Williams Energy, Inc. (Nasdaq:CWEI)||$582.1 million||+4.6%|
|InterOil Corporation (USA) (NYSE:IOC)||$3.89 billion||+4.5%|
|Bonanza Creek Energy Inc (NYSE:BCEI)||$761.4 million||+4.3%|
|Range Resources Corp. (NYSE:RRC)||$10.83 billion||+3.3%|
|Carrizo Oil & Gas, Inc. (Nasdaq:CRZO)||$988.6 million||+3.1%|
|Cabot Oil & Gas Corporation (NYSE:COG)||$8.86 billion||+2.4%|
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Venoco (NYSE:VQ) is currently at $11.08 per share after a dramatic increase of 16.3%. The company's volume is currently 2.1 million shares for the day, 8.1 times the average daily volume. 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. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for VQ is 91.5%, which is fairly high. 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. 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.
Clayton Williams Energy (Nasdaq:CWEI) is at $50.04 per share after an increase of 4.6%. This morning, the company is trading a volume of 31,423 shares. 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. 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 CWEI is 5.4, below the industry average of 17.42. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Can Investors Trust the P/E Ratio?
Increasing 4.5%, InterOil Corporation (NYSE:IOC) is trading at $84.14 per share. At 617,170 shares, the company's volume so far today is 0.9 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift 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/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 IOC is 2.04, which is relatively high. 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 compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Bonanza Creek Energy (NYSE:BCEI) has moved up 4.3% and is currently trading at $19.84 per share. The company's volume for the day so far is 101,927 shares. Yesterday's volume was only 89,067 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios like 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 are useful in determining how attractive a potential or existing investment is. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for BCEI is 1.42, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
Range (NYSE:RRC) has risen 3.3% and is currently trading at $68.82 per share. At 1.7 million shares, the company's volume so far today is one times the current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. RRC's dividend yield of 0.2% is fairly low. This may indicate that the company's stock is overpriced. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
Rising 3.1%, Carrizo Oil & Gas (Nasdaq:CRZO) is currently trading at $25.50 per share. So far today, the company's volume is 317,161 shares. The trading volume for a stock indicates the level of investor interest. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt ratio shows the proportion of assets that a company is financing through debt. CRZO has a high debt ratio of 67.3%. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Cabot Oil & Gas (NYSE:COG) has increased to a share price of $43.16, a 2.4% rise. The company's volume is currently 899,878 shares for the day, in keeping with its current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The debt-equity (D/E) ratio is a leverage ratio. COG has a debt-equity ratio of 46%, which is on the low side. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.