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Semiconductors Stocks, Including Broadcom, Making Big Moves Today
The market is currently up, with the Nasdaq moving up 0.8%, the S&P 500 rising 0.3% and the Dow climbing 0.3%.
The Semiconductors sector (XLK) is up 1%, outperforming the market overall. The biggest movers in the sector so far are:
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After an increase of 4.5%, Advantest Corp (NYSE:ATE) has reached a current price of $14.36. So far today, the company's volume is 1,900 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that 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 capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. The capitalizion ratio of 16.6% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Spreadtrum Communications, Inc (Nasdaq:SPRD) has increased to a share price of $18.96, a 4.1% rise. At 596,788 shares, the company's volume so far today is 0.4 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). SPRD has a P/E ratio of 4.1, in line with the industry average. 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
First Solar (Nasdaq:FSLR) has risen 3.9% to hit a current price of $21.93 per share. So far today, the company's volume is 2.1 million shares. This is on pace to reach yesterday's trading volume of 5.1 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. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. 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 FSLR is 0.42, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Cavium (Nasdaq:CAVM) is currently trading at $32.15 per share, a 3.6% increase. The company's volume is currently 769,554 shares for the day, in keeping with its current daily average. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. CAVM's P/B ratio of 5.2 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 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: Using The Price-To-Book Ratio To Evaluate Companies
Broadcom (Nasdaq:BRCM) has risen 2.6% and is currently trading at $35.61 per share. So far today, 3.3 million 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The dividend yield is calculated by dividing a company's dividends per share by its stock price. BRCM has a dividend yield of 1.2%, which is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing
EZchip (Nasdaq:EZCH) is up 2.5% to reach a current price of $29.76 per share. With 190,568 shares changing hands so far today, the company's volume is 0.2 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. 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. 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. EZCH's debt ratio of 4.8% is on the low side. 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.
After an increase of 2%, Universal (Nasdaq:PANL) has reached a current price of $41.70. The company is trading at a volume of 252,262 shares. This is on pace to reach yesterday's trading volume of 561,909 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PANL's PEG ratio is 5.31. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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.
The Semiconductors sector (XLK) is up 1%, outperforming the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Advantest Corp. (ADR) (NYSE:ATE) | $2.74 billion | +4.5% |
| Spreadtrum Communications, Inc (ADR) (Nasdaq:SPRD) | $856.2 million | +4.1% |
| First Solar (Nasdaq:FSLR) | $1.84 billion | +3.9% |
| Cavium Inc (Nasdaq:CAVM) | $1.55 billion | +3.6% |
| Broadcom (Nasdaq:BRCM) | $19.4 billion | +2.6% |
| EZchip Semiconductor Ltd. (Nasdaq:EZCH) | $812.8 million | +2.5% |
| Universal Display Corporation (Nasdaq:PANL) | $1.9 billion | +2% |
After an increase of 4.5%, Advantest Corp (NYSE:ATE) has reached a current price of $14.36. So far today, the company's volume is 1,900 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that 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 capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. The capitalizion ratio of 16.6% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Spreadtrum Communications, Inc (Nasdaq:SPRD) has increased to a share price of $18.96, a 4.1% rise. At 596,788 shares, the company's volume so far today is 0.4 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). SPRD has a P/E ratio of 4.1, in line with the industry average. 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
First Solar (Nasdaq:FSLR) has risen 3.9% to hit a current price of $21.93 per share. So far today, the company's volume is 2.1 million shares. This is on pace to reach yesterday's trading volume of 5.1 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. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. 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 FSLR is 0.42, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Cavium (Nasdaq:CAVM) is currently trading at $32.15 per share, a 3.6% increase. The company's volume is currently 769,554 shares for the day, in keeping with its current daily average. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. CAVM's P/B ratio of 5.2 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 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: Using The Price-To-Book Ratio To Evaluate Companies
Broadcom (Nasdaq:BRCM) has risen 2.6% and is currently trading at $35.61 per share. So far today, 3.3 million 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The dividend yield is calculated by dividing a company's dividends per share by its stock price. BRCM has a dividend yield of 1.2%, which is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing
EZchip (Nasdaq:EZCH) is up 2.5% to reach a current price of $29.76 per share. With 190,568 shares changing hands so far today, the company's volume is 0.2 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. 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. 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. EZCH's debt ratio of 4.8% is on the low side. 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.
After an increase of 2%, Universal (Nasdaq:PANL) has reached a current price of $41.70. The company is trading at a volume of 252,262 shares. This is on pace to reach yesterday's trading volume of 561,909 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PANL's PEG ratio is 5.31. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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.
by
Investopedia Staff
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