Filed Under: ,
Tickers in this Article: VAC, HST, FSRV, LHO, DFT, JLL, ACC
The morning has been bad for the market. The Nasdaq is down 1.3%; the S&P 500 has decreased 0.8%; and the Dow has fallen 0.5%.

The Real Estate Operations sector (IYR) is relatively unchanged on a bad day for the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Marriott Vacations Worldwide Corp (NYSE:VAC)$1.04 billion-3.5%
Host Hotels & Resorts (NYSE:HST)$11.15 billion-3.2%
FirstService Corporation (USA) (Nasdaq:FSRV)$780.7 million-2.1%
LaSalle Hotel Properties (NYSE:LHO)$2.45 billion-1.6%
DuPont Fabros Technology, Inc. (NYSE:DFT)$1.79 billion-1.5%
Jones Lang LaSalle Incorporated (NYSE:JLL)$3.02 billion-1.4%
American Campus Communities, Inc. (NYSE:ACC)$3.29 billion+1.3%
Broker Summary: TD Ameritrade Thinkorswim

After a decline of 3.5%, Marriott Vacations (NYSE:VAC) has hit a share price of $29.20. So far today, 78,494 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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 measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. VAC has a D/E ratio of 67%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Currently trading at $15 per share, Host Hotels & Resorts (NYSE:HST) has fallen 3.2%. The company's volume is currently 4.2 million shares for the day, 0.8 times its average over the past three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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 HST is 47.4%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

FirstService Corporation (Nasdaq:FSRV) has fallen 2.1% and is currently trading at $26.63 per share. The company's volume for the day so far is 2,700 shares. This is less trading activity than there was yesterday. The trading volume for a stock indicates the level of investor interest. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. The gross profit margin for FSRV is 34.4%. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Operating margin for FSRV is -1.9%. This is because the company reported a net operating loss in the most recent quarter. Net profit margin examines how effectively a company is managed and how profitable it is by looking at how much of each dollar in revenues ultimately hits the company's bottom line. Net margin is 4.3%.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. FSRV's PEG ratio is 1.24. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

LaSalle Hotel (NYSE:LHO) is trading at $28.12 per share, down 1.6%. The company's volume is currently 314,895 shares for the day, 0.5 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. LHO's P/B ratio of 1.35 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. 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

At $27.85, DuPont Fabros Technology (NYSE:DFT) has slipped 1.5%. This morning, the company is trading a volume of 231,662 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. DFT's gross profit margin is 69%. Operating profit measures how much cash the business throws off, and some consider it a more reliable measure of profitability since it is harder to manipulate with accounting tricks than net earnings. Operating profit margin for DFT is 33.3%. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. The company's net profit margin is 21.1%.

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. 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. DFT's P/E ratio of 46.0 is above the industry average of 14.12. 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. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Profit With The Power Of Price-To-Earnings

Jones Lang LaSalle (NYSE:JLL) is down 1.4% to reach $68.15 per share. So far today, the company's volume is 54,657 shares, 0.2 times the average volume over the last three months. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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 JLL is 0.98, which is relatively low. Low P/S ratios can indicate unrecognized value potential - so long as other criteria like high profit margins, low debt levels and growth prospects are in place. 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.

American Campus Communities (NYSE:ACC) has risen 1.3% and is currently trading at $44.69 per share. So far today, the company's volume is 1.2 million shares. Yesterday, 10.8 million shares changed hands. 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 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. 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 debt ratio is calculated by dividing total liabilities by total assets. ACC has a debt ratio of 53.7%. 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 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. 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.

comments powered by Disqus

Trading Center