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Southern and Other Utilities Stocks Making Big Moves on September 14, 2012
The Nasdaq has risen 1.1%, the S&P 500 has increased 0.6% and the Dow has moved up 0.4% on a good day for the market so far. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
The Utilities sector (XLU) is down 0.5% on a good day for the market overall. The biggest movers in the sector so far are:
Broker Summary: E-Trade Financial
Huaneng Power International, Inc (NYSE:HNP) is trading at $27.79 per share, down 6%. So far today, the company's volume is 63,138 shares, 0.8 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. 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. HNP has a low P/S ratio of 0.48. 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.
CPFL Energia S.A (NYSE:CPL) has risen 2.7% and is currently trading at $23.20 per share. The company is trading at a volume of 320,444 shares. This is about the same trading activity as there was yesterday. 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. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CPL's debt ratio of 76.3% is fairly high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Companhia Energetica Minas Gerais (NYSE:CIG) has risen 2.7% to hit a current price of $13.31 per share. So far today, the company's volume is 3.3 million shares, consistent with its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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 CIG is 8.2, below the industry average of 10.46. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: How To Find P/E And PEG Ratios
After an increase of 2.1%, National Fuel (NYSE:NFG) has reached a current price of $54.61. The company's volume for the day so far is 96,943 shares. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. The D/E ratio for NFG is 70%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Rising 2.1%, Western Gas (NYSE:WES) is currently trading at $50.15 per share. At 65,635 shares, the company's volume so far today is consistent with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. WES has a capitalization ratio of 37.9%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Falling 2%, Southern (NYSE:SO) is currently at a share price of $45.01. The company's volume for the day so far is 2.7 million shares. If a stock price moves on high volume, this means that the change is a significant one. 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. SO's PEG ratio is 3.62. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Crestwood Midstream (NYSE:CMLP) is currently trading at $23.77 per share, a 1.9% increase. The company's volume for the day so far is 62,080 shares, in keeping with 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. The P/B ratio for CMLP is 2.13, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Utilities sector (XLU) is down 0.5% on a good day for the market overall. The biggest movers in the sector so far are:
| Company | Market Cap | Percentage Change |
| Huaneng Power International, Inc (NYSE:HNP) | $10.38 billion | -6% |
| CPFL Energia S.A (NYSE:CPL) | $10.87 billion | +2.7% |
| Companhia Energetica Minas Gerais (NYSE:CIG) | $11.06 billion | +2.7% |
| National Fuel (NYSE:NFG) | $4.45 billion | +2.1% |
| Western Gas (NYSE:WES) | $4.7 billion | +2.1% |
| Southern (NYSE:SO) | $40.17 billion | -2% |
| Crestwood Midstream (NYSE:CMLP) | $1.12 billion | +1.9% |
Huaneng Power International, Inc (NYSE:HNP) is trading at $27.79 per share, down 6%. So far today, the company's volume is 63,138 shares, 0.8 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. 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. HNP has a low P/S ratio of 0.48. 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.
CPFL Energia S.A (NYSE:CPL) has risen 2.7% and is currently trading at $23.20 per share. The company is trading at a volume of 320,444 shares. This is about the same trading activity as there was yesterday. 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. 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 debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CPL's debt ratio of 76.3% is fairly high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Companhia Energetica Minas Gerais (NYSE:CIG) has risen 2.7% to hit a current price of $13.31 per share. So far today, the company's volume is 3.3 million shares, consistent with its current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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 CIG is 8.2, below the industry average of 10.46. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: How To Find P/E And PEG Ratios
Rising 2.1%, Western Gas (NYSE:WES) is currently trading at $50.15 per share. At 65,635 shares, the company's volume so far today is consistent with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. WES has a capitalization ratio of 37.9%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Falling 2%, Southern (NYSE:SO) is currently at a share price of $45.01. The company's volume for the day so far is 2.7 million shares. If a stock price moves on high volume, this means that the change is a significant one. 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. SO's PEG ratio is 3.62. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Crestwood Midstream (NYSE:CMLP) is currently trading at $23.77 per share, a 1.9% increase. The company's volume for the day so far is 62,080 shares, in keeping with 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. The P/B ratio for CMLP is 2.13, indicating that the stock is trading for more than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: Investment Valuation Ratios: Price/Book Value Ratio
The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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