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Tickers in this Article: EXBD, INWK, NTGR, URI, NFLX, LL, JCP
On a good day for the market, the Nasdaq has increased 0.7%, the S&P 500 is up 0.7% and the Dow is trading up 0.6%.

The Services sector (IYC) is up 0.2%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
The Corporate Executive Board Company (NYSE:EXBD)$1.4 billion+11.3%
InnerWorkings, Inc. (Nasdaq:INWK)$678.6 million-6.6%
NetGear, Inc. (Nasdaq:NTGR)$1.33 billion+5.4%
United Rentals, Inc. (NYSE:URI)$3.17 billion+5.2%
Netflix (Nasdaq:NFLX)$3.77 billion+4.7%
Lumber Liquidators Holdings Inc (NYSE:LL)$947.7 million-3.8%
JC Penney (NYSE:JCP)$4.97 billion-3.6%
Broker Summary: Charles Schwab Online Brokerage

After a big jump of 11.3%, Corporate Executive Board (NYSE:EXBD) is trading at $46.33 per share. So far today, 380,461 shares have changed hands. A stock's volume conveys how excited investors are about it. 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. EXBD has a gross profit margin of 66%. 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. With a net profit margin of 11.4%, the company has a high one compared to its gross profit margin. A high net profit margin means a company is able to control its costs that buy goods and services at prices significantly higher than it costs to produce or provide them. The operating profit margin indicates how much EBIT is generated per dollar of sales. EXBD's operating profit margin is 19.6%.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. EXBD has a low dividend yield of 1.7%. This could indicate that that the stock is overpriced or that future dividends might be higher. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Dividend Yield For The Downturn

InnerWorkings (Nasdaq:INWK) is trading at $13 per share, down 6.6%. The company's volume is currently 270,135 shares for the day, 0.7 times its current three-month 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 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. 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. INWK has a low gross profit margin of 21.7%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. Relative to its gross profit margin, INWK's operating profit margin of 3.1% and net profit margin of 2.6% are low.

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 measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. INWK's P/S ratio of 0.83 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. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

NetGear (Nasdaq:NTGR) has risen 5.4% and is currently trading at $37.06 per share. The company's volume is currently 346,277 shares. This is below yesterday's volume of 676,209 shares. If a stock price moves on high volume, this means that the change is a significant one. 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. NTGR's gross profit margin is 32.3%. Compared with its gross profit margin, NTGR's operating profit margin of 11.1% and net profit margin of 7.8% are low.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio shows the proportion of assets that a company is financing through debt. NTGR has a low debt ratio of 28.5%. 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.

United Rentals (NYSE:URI) has increased to a share price of $35.62, a 5.2% rise. So far today, the company's volume is one million shares, 0.3 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 URI is 52.3%. 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 URI is 13.3%. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. The company has a net profit margin of 4.9%.

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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. The P/E ratio for URI is 18.5, above the industry average of 16.07. 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. 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

After an increase of 4.7%, Netflix (Nasdaq:NFLX) has reached a current price of $71.03. So far today, the company's volume is 1.8 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. Margin ratios highlight companies that are worth further examination. NFLX's gross profit margin is 66.1%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. NFLX's operating profit margin is -0.2%. In other words, the company reported a net operating loss in the most recent quarter. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. Relative to its gross profit margin, the company has a high net profit margin of 4.8%. This usually means that it also has one or more advantages over its competition.

Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. NFLX's D/E ratio is 60%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

At $33.10, Lumber Liquidators Holdings (NYSE:LL) has slipped 3.8%. So far today, the company's volume is 316,240 shares, 0.5 times its average over the past three months. Volume indicates the level of interest that investors have in a company at its current price. 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. The gross profit margin for LL is 36.9%. 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). LL's operating profit margin is 7.1%. 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%.

Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. LL has a PEG ratio of 1.89, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Falling 3.6%, JC Penney (NYSE:JCP) is currently at a share price of $21.91. The company is trading at a volume of 4.9 million shares. Trading activity is down from yesterday when 6.7 million shares changed hands. In technical analysis, trading volume is used to determine the strength of a market indicator. Margin analysis is a great way to understand the profitability of companies. JCP has a gross profit margin of 35.3%. Both JCP's operating and net profit margins are negative. This is because the company reported net and operating losses in the most recent quarter.

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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for JCP is 1.22, indicating that the stock is trading for more 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Using The Price-To-Book Ratio To Evaluate Companies

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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