The morning has been bad for the market. The Nasdaq has slipped 0.8%; the S&P 500 has decreased 0.7%; and the Dow is trading down 0.7%.
The Real Estate Operations sector (IYR) is currently ahead of the overall market, down only 0.3%, and its biggest movers are currently:
|Company||Market Cap||Percentage Change|
|W. P (NYSE:WPC)||$2.06 billion||-2.3%|
|American Assets Trust (NYSE:AAT)||$1.06 billion||+1.4%|
|Jones Lang LaSalle (NYSE:JLL)||$3.41 billion||-1.3%|
|SL Green (NYSE:SLG)||$7.25 billion||-1.1%|
|Home Properties (NYSE:HME)||$3.08 billion||-1%|
|Zillow (Nasdaq:Z)||$1.4 billion||+0.9%|
|Rayonier (NYSE:RYN)||$6 billion||+0.8%|
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Currently trading at $49.90 per share, W. P (NYSE:WPC) has fallen 2.3%. The company's volume is currently 30,219 shares for the day, 0.3 times its current three-month 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 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for WPC is 33.3%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
After an increase of 1.4%, American Assets Trust (NYSE:AAT) has reached a current price of $27.36. The company's volume for the morning is 65,155 shares. This is 0.3 times the average daily volume. 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. 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 16.69, AAT's P/E ratio of 148.4 is quite high. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings
At $76.38, Jones Lang LaSalle (NYSE:JLL) has slipped 1.3%. So far today, the company's volume is 21,296 shares, lighter than yesterday's volume of 175,729 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. 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. 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. JLL has a debt-equity ratio of 36%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. 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.
SL Green (NYSE:SLG) is trading at $79.57 per share, down 1.1%. So far today, 132,284 shares have changed hands. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. SLG has a PEG ratio of 12.58. 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.
Slipping 1%, Home Properties (NYSE:HME) is currently trading at $61.17 per share. The company's volume for the day so far is 151,637 shares, 0.3 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. HME's stock is trading for more than its book value with a P/B ratio of 2.56. This may be a sign that the company is overvalued. 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
After rising 0.9%, Zillow (Nasdaq:Z) is currently trading at a share price of $42.40. So far today, the company's volume is 277,439 shares. This is 0.1 times the current daily average. The trading volume for a stock indicates the level of investor interest. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for Z is 12.58, which is relatively high. This could be a good sign if the share price increases. 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.
Rayonier (NYSE:RYN) is at $49.30 per share after an increase of 0.8%. At 445,767 shares, the company's volume so far today is which is likely to result in less activity than yesterday's volume of 1.4 million shares. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for RYN is 51.7%. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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.