Filed Under: ,
Tickers in this Article: PAY, SWI, IDCC, SSYS, MLNX, CRM, ELOQ
On a bad day for the market, the Nasdaq has decreased 1%, the S&P 500 is down 0.5% and the Dow has declined 0.2%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

The Technology sector (XLK) is down 0.9%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
VeriFone Systems (NYSE:PAY).24 billion-7.7%
SolarWinds (NYSE:SWI).3 billion-7%
InterDigital (Nasdaq:IDCC).41 billion+5.2%
Stratasys (Nasdaq:SSYS).21 billion-4.6%
Mellanox (Nasdaq:MLNX).01 billion-3.5% (NYSE:CRM).36 billion-2.8%
Eloqua (Nasdaq:ELOQ)5.7 million+2.8%
Broker Summary: OptionsXpress Online Trading Platform

After a decline of 7.7%, VeriFone Systems (NYSE:PAY) has hit a share price of $27.70. At 5.2 million shares, the company's volume so far today is 1.8 times its current three-month 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. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for PAY is 109%. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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.

At $53.87, SolarWinds (NYSE:SWI) has slipped 7%. The company's volume for the morning is 937,496 shares. This is 1.3 times its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. SWI's PEG ratio is 2.98. 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.

InterDigital (Nasdaq:IDCC) is currently trading at $34.69 per share, a 5.2% increase. The company's volume is currently 787,049 shares for the day, which is more trading activity than there was yesterday. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. IDCC has a P/B ratio of 3.62 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Slipping 4.6%, Stratasys (Nasdaq:SSYS) is currently trading at $54 per share. This morning, the company is trading a volume of 311,025 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for SSYS is 5.92, which is relatively high. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Mellanox (Nasdaq:MLNX) has decreased to $97.29 per share, a 3.5% fall. With 1.1 million shares changing hands so far today, the company's volume is one times the average volume over the last three months. 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 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. 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. MLNX has a debt ratio of 18%, which is fairly low. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.

Currently trading at $147.80 per share, (NYSE:CRM) has fallen 2.8%. So far today, the company's volume is 965,598 shares. This is in line with its current daily average. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The debt-equity (D/E) ratio is a leverage ratio. CRM has a low debt-equity ratio of 30%. 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. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

After rising 2.8%, Eloqua (Nasdaq:ELOQ) is currently trading at a share price of $18.48. So far today, 243,554 shares have changed hands, whereas yesterday, volume was only 124,796 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 debt ratio shows the proportion of assets that a company is financing through debt. ELOQ has a high debt ratio of 124.4%. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

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.

comments powered by Disqus

Trading Center