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Tickers in this Article: DBD, MELI, TUDO, EPAM, CTXS, ROP, EQIX
The morning has been bad for the market. The Nasdaq has decreased 0.2%; the S&P 500 is down 0.1%; and the Dow has fallen 0.1%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

On a bad day for the market overall, the Technology sector (XLK) has shown little change and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Diebold Incorporated (NYSE:DBD)$2.29 billion-10.5%
Mercadolibre Inc (Nasdaq:MELI)$3.34 billion-10.1%
Tudou Hldg Ltd (ADR) (Nasdaq:TUDO)$796.5 million-8.3%
EPAM Systems Inc (NYSE:EPAM)$648 million+6.4%
Citrix Systems (Nasdaq:CTXS)$14.49 billion-5.9%
Roper Industries (NYSE:ROP)$9.61 billion+4.6%
Equinix Inc (Nasdaq:EQIX)$8.98 billion-4.2%
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Diebold (NYSE:DBD) is at a share price of $32.49 after a sharp decline of 10.5%. So far today, the company's volume is 1.2 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. DBD's capitalization ratio is 40.9%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Mercadolibre (Nasdaq:MELI) is currently trading at $68.05 per share, after a steep drop of 10.1%. The company's volume is currently 1.3 million shares for the day, more than yesterday's 568,433 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). MELI's P/E ratio of 40.5 is under the industry average of 109.99. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. 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: The P/E Ratio: A Good Market-Timing Indicator

At $25.76, Tudou Hldg Ltd (Nasdaq:TUDO) has slipped 8.3%. So far this morning, 14,318 shares have changed hands. This is 0.1 times the current daily average. Volume is used to evaluate how meaningful the price movement of a stock is. 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. TUDO has a P/B ratio of 4.21 which shows that its share price is higher 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: Using The Price-To-Book Ratio To Evaluate Companies

EPAM Systems (NYSE:EPAM) has risen 6.4% to hit a current price of $16.30 per share. So far today, the company's volume is 47,979 shares, 1.1 times the current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 EPAM is a high 2.43. 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.

Falling 5.9%, Citrix (Nasdaq:CTXS) is currently at a share price of $73.22. So far today, 1.6 million shares have changed hands. 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. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CTXS has a low debt ratio of 32.3%. 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. 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.

Increasing 4.6%, Roper (NYSE:ROP) is trading at $103.12 per share. This morning, 1.1 million shares have been traded, whereas yesterday, volume was only 604,997 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a leverage ratio. ROP has a debt-equity ratio of 32%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Slipping 4.2%, Equinix (Nasdaq:EQIX) is currently trading at $178.94 per share. The company's volume for the morning is 583,309 shares. This is in keeping with its current daily average. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for EQIX is 53.1%, which is fairly high. A company considered too highly leveraged (too much debt) may find its freedom of action restricted by its creditors and/or have its profitability hurt by high interest costs. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. 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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