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Tickers in this Article: SWKS, CYMI, FSLR, COHR, CREE, MLNX, PANL
It's been a bad day for the market after the morning's trading. The Nasdaq has decreased 0.3%; the S&P 500 has slipped 0.3%; and the Dow is trading down 0.1%.

The Semiconductors sector (XLK) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Skyworks Solutions (Nasdaq:SWKS)$5.58 billion-8.8%
Cymer (Nasdaq:CYMI)$1.78 billion-3.8%
First Solar (Nasdaq:FSLR)$2.01 billion-3.7%
Coherent (Nasdaq:COHR)$1.19 billion-3.6%
Cree (Nasdaq:CREE)$3.34 billion-2.2%
Mellanox (Nasdaq:MLNX)$4.06 billion+2%
Universal (Nasdaq:PANL)$1.94 billion-1.9%
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Skyworks Solutions (Nasdaq:SWKS) is down 8.8% to reach $26.88 per share. The company's volume for the day so far is 6.9 million shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for SWKS is 3.34, 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. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Slipping 3.8%, Cymer (Nasdaq:CYMI) is currently trading at $53.66 per share. So far today, the company's volume is 180,674 shares, 0.9 times the average daily volume. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. CYMI's P/E ratio of 32.2 is consistent with the industry average. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

After a decline of 3.7%, First Solar (Nasdaq:FSLR) has hit a share price of $22.62. The company's volume is currently 2.9 million shares. This is on pace to reach yesterday's trading volume of 7.3 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 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. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. FSLR's capitalization ratio is 12.3%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Coherent (Nasdaq:COHR) has decreased to $48.22 per share, a 3.6% fall. The company's volume is currently 60,539 shares for the day, 0.9 times its average over the past three months. If a stock price makes a big move up or down, volume lets us know the significance of that 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. COHR's stock is trading for more than its book value with a P/B ratio of 1.76. This may be a sign that the company is overvalued. 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

At $28.01, Cree (Nasdaq:CREE) has slipped 2.2%. So far today, the company's volume is 427,780 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. CREE's PEG ratio is 3.67. 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.

Mellanox (Nasdaq:MLNX) is at $106.72 per share after an increase of 2%. So far today, the company's volume is 518,714 shares, 0.3 times its current daily average. Volume indicates the level of interest that investors have in a company at its current price. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for MLNX is a low 18%. 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.

Universal (Nasdaq:PANL) has fallen 1.9% and is currently trading at $39.90 per share. So far today, 169,754 shares of the company's stock have changed hands. At this rate, trading activity will likely be down from yesterday when 934,458 shares changed hands. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. 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. PANL has a high P/S ratio of 20.08. This could be a good sign if the share price increases. 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.

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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