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Semiconductors Stocks Making Big Moves on July 17, 2012
The market is currently down, with the Nasdaq decreasing 0.1%, the S&P 500 falling 0.1% and the Dow declining 0.2%.
The Semiconductors sector (XLK) is currently lagging behind the overall market, down 0.2%, and its current biggest movers are:
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Rising 7.2%, M\x2FA-COM Technology Solutions (Nasdaq:MTSI) is currently trading at $17.07 per share. At 2,500 shares, the company's volume so far today is 0.1 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. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for MTSI is 35%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. MTSI has a negative operating margin of -0.7%. In other words, the company reported a net operating loss in the most recent quarter. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. The company has a net profit margin of 1.4%.
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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. MTSI's P/S ratio of 0.52 is fairly low. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Broadcom (Nasdaq:BRCM) is down 4.3% to reach $29.47 per share. The company is trading at a volume of 14.8 million shares. Yesterday's volume was only 5.5 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. BRCM has a gross profit margin of 53.2%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. BRCM's operating profit margin of 2.7% is high relative to its gross profit margin. A business that has a higher operating margin than others in the industry is generally doing better as long as the gains didn't come by piling on debt or taking highly risky speculations with shareholders' money. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. Net margin is 10.6%.
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 shows the proportion of assets that a company is financing through debt. BRCM has a debt ratio of 28.1%, which is fairly low. A low debt ratio means the company has more available cash flow. 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.
Slipping 4.2%, Mellanox (Nasdaq:MLNX) is currently trading at $63.10 per share. So far today, the company's volume is 735,830 shares, 0.9 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 MLNX is 72.6%. MLNX's operating margin of 14.9% and net margin of 8.2% are high relative to its gross margin.
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. The P/E ratio for MLNX is 110.1, above the industry average of 5.59. This could mean that the market is expecting big things over the next few months or years. 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: How To Find P/E And PEG Ratios
ARM Holdings plc (Nasdaq:ARMH) is currently trading at a share price of $21.89, a 3.7% decline. The company's volume for the day so far is two million 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 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. ARMH has a relatively high gross profit margin of 94.4%. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. Relative to its gross profit margin, ARMH's operating profit margin of 36.5% and net profit margin of 25.3% are high.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). PEG ratio for ARMH is 2.94. 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.
Currently trading at $16.85 per share, International (NYSE:IRF) has fallen 3.6%. The company's volume is currently 282,049 shares for the day, 0.4 times its average over the past three months. A stock's volume conveys how excited investors are about it. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for IRF is 42.8%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. Operating margin for IRF is -2.9%. This is because the company reported a net operating loss in the most recent quarter. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. The company's net profit margin is 4.8%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. IRF's stock is trading for less than its book value as can be seen from it's P/B value of 0.86. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
First Solar (Nasdaq:FSLR) has decreased to $14.45 per share, a 3.5% fall. The company's volume for the day so far is 1.5 million shares. Trading activity is down from yesterday when six million shares changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Margin ratios highlight companies that are worth further examination. FSLR's gross profit margin is 38.9%. FSLR has negative operating and net profit margins. This is because the company reported a net loss and net operating loss in the most recent quarter.
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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. FSLR has a low P/S ratio of 0.81. The lower the P/S ratio, the more reasonably price the stock, all else being equal. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Falling 3.2%, EZchip (Nasdaq:EZCH) is currently at a share price of $32.30. The company's volume is currently 95,268 shares for the day, 0.2 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. EZCH has a gross profit margin of 65.4%. Operating profit gives investors an opportunity to do profit-margin comparisons between companies that do not issue a separate disclosure of their cost of goods sold figures (which are needed to do gross margin analysis). EZCH has an operating profit margin of 31.5%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company has a net profit margin of 17.9%.
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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. EZCH has a low debt ratio of 5.2%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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 currently lagging behind the overall market, down 0.2%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| M\x2FA-COM Technology Solutions Holdings (Nasdaq:MTSI) | $721.6 million | +7.2% |
| Broadcom (Nasdaq:BRCM) | $16.98 billion | -4.3% |
| Mellanox Technologies, Ltd. (Nasdaq:MLNX) | $2.62 billion | -4.2% |
| ARM Holdings plc (ADR) (Nasdaq:ARMH) | $10.42 billion | -3.7% |
| International Rectifier Corporation (NYSE:IRF) | $1.21 billion | -3.6% |
| First Solar (Nasdaq:FSLR) | $1.3 billion | -3.5% |
| EZchip Semiconductor Ltd. (Nasdaq:EZCH) | $934.9 million | -3.2% |
Rising 7.2%, M\x2FA-COM Technology Solutions (Nasdaq:MTSI) is currently trading at $17.07 per share. At 2,500 shares, the company's volume so far today is 0.1 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. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for MTSI is 35%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. MTSI has a negative operating margin of -0.7%. In other words, the company reported a net operating loss in the most recent quarter. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. The company has a net profit margin of 1.4%.
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. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. MTSI's P/S ratio of 0.52 is fairly low. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
Broadcom (Nasdaq:BRCM) is down 4.3% to reach $29.47 per share. The company is trading at a volume of 14.8 million shares. Yesterday's volume was only 5.5 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. BRCM has a gross profit margin of 53.2%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. BRCM's operating profit margin of 2.7% is high relative to its gross profit margin. A business that has a higher operating margin than others in the industry is generally doing better as long as the gains didn't come by piling on debt or taking highly risky speculations with shareholders' money. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. Net margin is 10.6%.
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 shows the proportion of assets that a company is financing through debt. BRCM has a debt ratio of 28.1%, which is fairly low. A low debt ratio means the company has more available cash flow. 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.
Slipping 4.2%, Mellanox (Nasdaq:MLNX) is currently trading at $63.10 per share. So far today, the company's volume is 735,830 shares, 0.9 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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 MLNX is 72.6%. MLNX's operating margin of 14.9% and net margin of 8.2% are high relative to its gross margin.
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. The P/E ratio for MLNX is 110.1, above the industry average of 5.59. This could mean that the market is expecting big things over the next few months or years. 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: How To Find P/E And PEG Ratios
ARM Holdings plc (Nasdaq:ARMH) is currently trading at a share price of $21.89, a 3.7% decline. The company's volume for the day so far is two million 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 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. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. ARMH has a relatively high gross profit margin of 94.4%. This means that the company will have a lot of money left over to spend on other business operations, such as research and development or marketing. Relative to its gross profit margin, ARMH's operating profit margin of 36.5% and net profit margin of 25.3% are high.
Currently trading at $16.85 per share, International (NYSE:IRF) has fallen 3.6%. The company's volume is currently 282,049 shares for the day, 0.4 times its average over the past three months. A stock's volume conveys how excited investors are about it. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. The gross profit margin for IRF is 42.8%. Operating margin provides a measure of a company's ability to pay its fixed costs such as interest on debt, particular if its business were to decline in the future. Operating margin for IRF is -2.9%. This is because the company reported a net operating loss in the most recent quarter. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. The company's net profit margin is 4.8%.
Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. IRF's stock is trading for less than its book value as can be seen from it's P/B value of 0.86. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
First Solar (Nasdaq:FSLR) has decreased to $14.45 per share, a 3.5% fall. The company's volume for the day so far is 1.5 million shares. Trading activity is down from yesterday when six million shares changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Margin ratios highlight companies that are worth further examination. FSLR's gross profit margin is 38.9%. FSLR has negative operating and net profit margins. This is because the company reported a net loss and net operating loss in the most recent quarter.
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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. FSLR has a low P/S ratio of 0.81. The lower the P/S ratio, the more reasonably price the stock, all else being equal. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Falling 3.2%, EZchip (Nasdaq:EZCH) is currently at a share price of $32.30. The company's volume is currently 95,268 shares for the day, 0.2 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. EZCH has a gross profit margin of 65.4%. Operating profit gives investors an opportunity to do profit-margin comparisons between companies that do not issue a separate disclosure of their cost of goods sold figures (which are needed to do gross margin analysis). EZCH has an operating profit margin of 31.5%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company has a net profit margin of 17.9%.
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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. EZCH has a low debt ratio of 5.2%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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