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Tickers in this Article: CRUS, MPWR, SWKS, CAVM, MLNX, CYMI, UTEK
The morning has been bad for the market. The Nasdaq is down 1%; the S&P 500 has decreased 0.5%; and the Dow has declined 0.2%.

The Semiconductors sector (XLK) is down 0.9%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
Cirrus Logic (Nasdaq:CRUS)$2.5 billion-4.5%
Monolithic Power Systems (Nasdaq:MPWR)$696.6 million-4.2%
Skyworks Solutions (Nasdaq:SWKS)$4.49 billion-4%
Cavium (Nasdaq:CAVM)$1.67 billion-3.5%
Mellanox (Nasdaq:MLNX)$4.01 billion-3.5%
Cymer (Nasdaq:CYMI)$1.61 billion-2.8%
Ultratech (Nasdaq:UTEK)$829.1 million-2.6%
Broker Summary: TD Ameritrade Thinkorswim

Cirrus Logic (Nasdaq:CRUS) is currently trading at a share price of $36.93, a 4.5% decline. The company's volume for the day so far is 2.1 million shares, 0.7 times the current three-month average. A stock's volume conveys how excited investors are about it. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CRUS has a low debt ratio of 18.3%. 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 $18.92 per share, Monolithic Power Systems (Nasdaq:MPWR) has fallen 4.2%. The company's volume for the day so far is 104,586 shares. This is about the same trading activity as there was yesterday. The trading volume for a stock indicates the level of investor interest. 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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. MPWR has a PEG ratio of 2.07. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Slipping 4%, Skyworks Solutions (Nasdaq:SWKS) is currently trading at $22.58 per share. At 3.8 million shares, the company's volume so far today is 0.4 times the current daily average. 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. 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 calculated by dividing the current stock price by the company's book value per share. SWKS' P/B ratio of 2.39 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. 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

Falling 3.5%, Cavium (Nasdaq:CAVM) is currently at a share price of $32.31. So far today, 299,559 shares have changed hands. 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. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for CAVM is 6.0, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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 a decline of 3.5%, Mellanox (Nasdaq:MLNX) has hit a share price of $97.29. At 1.1 million shares, the company's volume so far today is one times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. 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. Compared to the industry average of 14.34, MLNX's P/E ratio of 83.5 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. 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: The P/E Ratio: A Good Market-Timing Indicator

At $50.29, Cymer (Nasdaq:CYMI) has slipped 2.8%. So far today, the company's volume is 134,047 shares. This is a sign that there will be less trading activity than there was yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 shows the proportion of assets that a company is financing through debt. CYMI's debt ratio of 20.6% is on the low side. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Ultratech (Nasdaq:UTEK) has decreased to $30.57 per share, a 2.6% fall. At 104,577 shares, the company's volume so far today is in keeping with its current daily average. 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 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. UTEK has a PEG ratio of 1.61, which is consistent with the industry average. 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 On any given day, a particular stock may see positive or negative change in its share price. 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.

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