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Tickers in this Article: VRA, SHOO, ALV, MHK, WHR, ACAT, SWK
This morning's trading has marked a bad day for the market so far. The Nasdaq has fallen 0.2%; the S&P 500 has declined 0.3%; and the Dow is trading down 0.2%. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.

The Consumer Cyclical sector (XLY) is currently lagging behind the overall market, down 0.7%, and its current biggest movers are:
CompanyMarket CapPercentage Change
Vera Bradley (Nasdaq:VRA)$1.1 billion-5.9%
Steven (Nasdaq:SHOO)$1.95 billion-3.6%
Autoliv (NYSE:ALV)$5.96 billion-2.8%
Mohawk Industries (NYSE:MHK)$5.18 billion-2.7%
Whirlpool (NYSE:WHR)$5.84 billion-2.7%
Arctic Cat (Nasdaq:ACAT)$572.8 million+2.5%
Stanley Black & Decker, Inc (NYSE:SWK)$11.5 billion-2.4%
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Falling 5.9%, Vera Bradley (Nasdaq:VRA) is currently at a share price of $25.58. So far today, the company's volume is 189,177 shares, on pace to finish the day below yesterday's volume of 812,882 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for VRA is a high 2.21. 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 compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Slipping 3.6%, Steven (Nasdaq:SHOO) is currently trading at $41.12 per share. This morning, the company's volume is 81,745 shares. This is 0.3 times its current daily average. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. SHOO's stock is trading for more than its book value with a P/B ratio of 3.49. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Autoliv (NYSE:ALV) is currently trading at a share price of $60.76, a 2.8% decline. At 162,540 shares, the company's volume so far today is 0.4 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. ALV has a fairly low capitalization ratio of 11.7%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

At $73.04, Mohawk Industries (NYSE:MHK) has slipped 2.7%. So far today, 145,608 shares have changed hands. Volume indicates the level of interest that investors have in a company at its current price. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). MHK has a P/E ratio of 24.2, high compared to the industry average of 20.66. 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: Can Investors Trust the P/E Ratio?

Whirlpool (NYSE:WHR) has decreased to $73.27 per share, a 2.7% fall. The company's volume is currently 299,705 shares for the day, lighter than yesterday's volume of 1.4 million shares. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. WHR has a high debt ratio of 71.2%. This means that most of the company's assets are financed through debt. 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.

Arctic Cat (Nasdaq:ACAT) has risen 2.5% and is currently trading at $44.65 per share. So far this morning, 94,792 shares have changed hands. This is consistent with its current daily average. A stock's volume conveys how excited investors are about it. 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. 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. The P/S ratio for ACAT is 0.77, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. 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.

Stanley Black & Decker, Inc (NYSE:SWK) is trading at $66.74 per share, down 2.4%. So far today, the company's volume is 448,008 shares, in keeping with its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The D/E ratio for SWK is 57%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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