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Tickers in this Article: MLNX, NTCT, PLXS, SMCI, IBM, WCC, ATHN
On a good day for the market, the Nasdaq has increased 1.1%, the S&P 500 has risen 0.3% and the Dow has moved up 0.3%. 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.

Underperforming the market overall, the Technology sector (XLK) is up 0.9%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
Mellanox Technologies, Ltd. (Nasdaq:MLNX)$2.64 billion+41.5%
NetScout Systems, Inc. (Nasdaq:NTCT)$822.3 million+13%
Plexus Corp. (Nasdaq:PLXS)$960.2 million+9.7%
Super Micro Computer, Inc. (Nasdaq:SMCI)$589.1 million-5.8%
IBM (NYSE:IBM)$217.14 billion+3.7%
WESCO International, Inc. (NYSE:WCC)$2.48 billion-3.3%
athenahealth, Inc (Nasdaq:ATHN)$3.17 billion+3%
Broker Summary: Charles Schwab Online Brokerage

Mellanox (Nasdaq:MLNX) has soared 41.5% to reach a current price of $93.92 per share. At 3.7 million shares, the company's volume so far today is 3.6 times the 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. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for MLNX is 72.6%. Operating margin for MLNX is 14.9% and net margin is 8.2%, both high relative to its gross margin.

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. A price/sales ratio is derived by dividing stock market price by company sales. MLNX's P/S ratio of 5.79 is on the high side. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.

NetScout Systems (Nasdaq:NTCT) rose a significant 13% to reach $22.22 per share. So far today, the company's volume is 243,759 shares. This is consistent with its current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios include 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. NTCT has a low debt ratio of 39.8%. 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.

Increasing 9.7%, Plexus (Nasdaq:PLXS) is trading at $30.12 per share. So far today, the company's volume is 154,477 shares, which is less activity than yesterday's volume of 348,219 shares. Volume is an important indicator because it indicates how significant a price shift is. 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. PLXS has a low gross profit margin of 11.8%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Compared with its gross profit margin, PLXS' operating profit margin of 4.5% and net profit margin of 3.6% are low.

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-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. PLXS has a low debt-equity ratio of 45%. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Falling 5.8%, Super Micro Computer (Nasdaq:SMCI) is currently at a share price of $13.37. The company is currently trading a volume of 518,830 shares. The trading volume for a stock indicates the level of investor interest. Margin analysis is a great way to understand the profitability of companies. SMCI has a low gross profit margin of 17%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. SMCI's operating margin of 4% and net margin of 3.5% are low relative to its gross margin.

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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). SMCI has a P/E ratio of 18.2. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Investment Valuation Ratios: Price/Earnings Ratio

After rising 3.7%, IBM (NYSE:IBM) is currently trading at a share price of $195.17. The company's volume is currently 5.2 million shares for the day, 1.1 times the average volume over the last three months. 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. 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 IBM is 47.1%. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. Operating profit margin for IBM is 14.7%. Net profit margin compares net income with sales. Net margin is 15%.

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 is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for IBM is 55.4%, which is fairly high. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

WESCO International (NYSE:WCC) has fallen 3.3% and is currently trading at $55.10 per share. The company's volume for the morning is 1.1 million shares. This is 1.5 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. WCC has a low gross profit margin of 20.3%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. Operating margin for WCC is 5.2% and net margin is 3.4%, both low relative to its gross margin.

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. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. WCC's PEG ratio of 1.13 is in line 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.

athenahealth (Nasdaq:ATHN) has moved up 3% and is currently trading at $91.04 per share. The company's volume is currently 382,503 shares for the day, while it was 1.5 million shares yesterday. If a stock price moves on high volume, this means that the change is a significant one. 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. The gross profit margin for ATHN is 62.9%. ATHN's operating margin of 5.4% and net margin of 5.2% are high relative to its gross margin.

Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. ATHN has a P/B ratio of 12.88 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio

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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