Filed Under: ,
Tickers in this Article: Z, FSRV, IVR, PPS, PMT, DLR, PKY
It's been a good morning for the market. The Nasdaq has climbed 0.3%; the S&P 500 is up 0.6%; and the Dow has risen 0.6%.

Despite a good day for the overall market so far, the Real Estate Operations sector (IYR) is down 0.4% and its current biggest movers are:
CompanyMarket CapPercentage Change
Zillow (Nasdaq:Z)$1.28 billion-3%
FirstService Corporation (Nasdaq:FSRV)$869.7 million+2.8%
Invesco Mortgage Capital (NYSE:IVR)$2.35 billion+2.3%
Post Properties (NYSE:PPS)$2.63 billion-1.8%
PennyMac Mortgage (NYSE:PMT)$992.2 million+1.8%
Digital Realty Trust (NYSE:DLR)$8.5 billion-1.7%
Parkway Properties (NYSE:PKY)$537.8 million+1.5%
Beginner's Guide To FXCM And Trading Station

At $37.41, Zillow (Nasdaq:Z) has slipped 3%. The company is trading at a volume of 595,990 shares. The trading volume for a stock indicates the level of investor interest. 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. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. Z has a P/E ratio of 550.7, high compared to the industry average of 5.59. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. 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: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

After an increase of 2.8%, FirstService Corporation (Nasdaq:FSRV) has reached a current price of $31.14. At 4,200 shares, the company's volume so far today is 0.2 times its current daily average. 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a 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. FSRV has a low P/S ratio of 0.37. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. 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.

After rising 2.3%, Invesco Mortgage Capital (NYSE:IVR) is currently trading at a share price of $20.87. The company's volume for the day so far is 1.4 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. IVR has a debt ratio of 87%, which is on the high side. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Post Properties (NYSE:PPS) has fallen 1.8% and is currently trading at $47.59 per share. So far today, the company's volume is 142,391 shares, 0.2 times the average volume over the last 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. PPS has a D/E ratio of 88%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

PennyMac Mortgage (NYSE:PMT) has moved up 1.8% and is currently trading at $24.25 per share. So far today, 577,289 shares of the company's stock have changed hands. This is on pace to reach yesterday's trading volume of 1.2 million 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. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for PMT is a high 9.2%. This is good news for income investors as the payout could be high. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Investment Valuation Ratios: Dividend Yield

Digital Realty Trust (NYSE:DLR) has decreased to $68.52 per share, a 1.7% fall. So far today, the company's volume is 412,378 shares, 0.3 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for DLR is 7.26. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Parkway Properties (NYSE:PKY) is at $13.25 per share after an increase of 1.5%. The company is currently trading a volume of 52,757 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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 PKY is 1.82, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. 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

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.

comments powered by Disqus

Trading Center