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Tickers in this Article: JIVE, MLNX, OPNT, CMTL, GRMN, SYNT, DWRE
The market has been slipping so far today. The Nasdaq has fallen 0.2%; the S&P 500 is trading down 0.3%; and the Dow has declined 0.4%. 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.

The Technology sector (XLK) is currently ahead of the overall market, down only 0.1%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Jive Software Inc (Nasdaq:JIVE)$1.01 billion+8%
Mellanox Technologies, Ltd. (Nasdaq:MLNX)$2.45 billion+6.4%
OPNET Technologies, Inc. (Nasdaq:OPNT)$609.7 million-5.7%
Comtech Telecomm. Corp. (Nasdaq:CMTL)$553.7 million-4.8%
Garmin Ltd. (Nasdaq:GRMN)$8.69 billion-4.8%
Syntel, Inc. (Nasdaq:SYNT)$2.41 billion-2.4%
Demandware Inc (NYSE:DWRE)$830.3 million+2.3%
Broker Summary: Fidelity Online Brokerage

Jive Software (Nasdaq:JIVE) has moved up 8% and is currently trading at $17.58 per share. So far today, 1.3 million shares have changed hands, whereas yesterday, volume was only 566,475 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. JIVE has an operating profit margin of -34.8%. This shows that the company reported a net operating loss in the most recent quarter.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. JIVE's capitalization ratio is 6.1%, which is relatively low. Low leverage is a significant balance sheet strength, a sign of a less risky investment. 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.

Mellanox (Nasdaq:MLNX) is at $65.56 per share after an increase of 6.4%. The company is currently trading a volume of 754,810 shares. This is 1.9 times its average volume over the past three months. If a stock price moves on high volume, this means that the change is a significant one. Margin analysis is a great way to understand the profitability of companies. MLNX has a gross profit margin of 72.6%. Relative to its gross profit margin, MLNX's operating profit margin of 14.9% and net profit margin of 8.2% are high.

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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. MLNX has a P/B ratio of 5.65 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Slipping 5.7%, OPNET Technologies (Nasdaq:OPNT) is currently trading at $25.48 per share. So far today, the company's volume is 74,133 shares, 0.4 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The dividend yield is calculated by dividing a company's dividends per share by its stock price. OPNT has a dividend yield of 2.2%. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Due Diligence On Dividends

At $29.34, Comtech (Nasdaq:CMTL) has slipped 4.8%. So far today, 112,901 shares have changed hands. Volume is an important indicator because it indicates how significant a price shift is. There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. The gross profit margin for CMTL is 46.6%. A company's operating margin is calculated by dividing operating income by revenues. Operating profit margin for CMTL is 10.7%. Comparing net profit margins for companies with similar business models or in similar industries can yield valuable information as to which business is actually performing better. Net profit margin for the company is 9.2%.

Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. 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 CMTL is a high 1.23. This could be a good sign if the share price increases. 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.

Garmin (Nasdaq:GRMN) is down 4.8% to reach $39.77 per share. This morning, 1.4 million shares have been traded, above yesterday's volume of 884,607 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. GRMN has a gross profit margin of 52.8%. The operating margin ratio is calculated by dividing operating income by sales and provides a measure of what percentage of a company's revenues is available to pay its fixed costs. GRMN has an operating profit margin of 16.2%. Net profit margin is a good tool for fundamental analysis and long-term investing but is less useful for technical analysts and short-term traders. Net margin is 18.2%.

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. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PEG ratio for GRMN is consistent with the industry average at 1.5. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Syntel (Nasdaq:SYNT) is currently trading at a share price of $56.29, a 2.4% decline. So far today, 39,701 shares have changed hands. This is 0.4 times the current three-month average. The trading volume for a stock indicates the level of investor interest. Margin ratios highlight companies that are worth further examination. SYNT's gross profit margin is 42.6%. SYNT has an operating profit margin of 26.1% and a net profit margin of 20.7%, both low compared to its gross profit margin.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio shows the proportion of assets that a company is financing through debt. SYNT has a low debt ratio of 14.8%. 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.

Demandware (NYSE:DWRE) has risen 2.3% to hit a current price of $29.24 per share. The company's volume is currently 37,900 shares for the day, 0.4 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. The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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