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Technology Stocks, Including Equinix, Making Big Moves on September 13, 2012
The market has been doing well after the morning's trading. The Nasdaq is up 0.3%; the S&P 500 has climbed 0.1%; and the Dow has moved up 0.2%. 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 0.3%, and these are its current biggest movers:
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Rising 7.3%, Equinix (Nasdaq:EQIX) is currently trading at $200.08 per share. So far today, the company's volume is 4.1 million shares. This is more trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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 high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's 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.
Currently trading at $18.78 per share, Constant Contact (Nasdaq:CTCT) has fallen 5.3%. At 368,759 shares, the company's volume so far today is 0.9 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). CTCT's PEG ratio of 1.07 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.
After a decline of 4%, Cirrus Logic (Nasdaq:CRUS) has hit a share price of $41.38. The company's volume for the day so far is 2.5 million shares. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. CRUS' stock is trading for more than its book value with a P/B ratio of 5.59. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
Medidata Solutions (Nasdaq:MDSO) has risen 3.6% and is currently trading at $38.96 per share. The company's volume for the day so far is 42,957 shares, in keeping with the average volume over the past three months. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. The P/E ratio for MDSO is 27.6, below the industry average of 74.72. A low P/E ratio may indicate that the market expects relatively slower earnings growth. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio
Falling 3.1%, Kayak (Nasdaq:KYAK) is currently at a share price of $29.90. So far today, 23,109 shares of the company's stock have changed hands. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for KYAK is 98.1%, which is relatively high. As such, the company is highly leveraged and not highly liquid. 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.
Energizer Holdings (NYSE:ENR) is trading at $68.76 per share, down 2.8%. At 382,660 shares, the company's volume so far today is 0.7 times its current daily average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. ENR's P/S ratio of 1.05 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. 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.
Slipping 2.5%, Littelfuse (Nasdaq:LFUS) is currently trading at $53.19 per share. This morning, the company is trading a volume of 23,045 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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 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. LFUS has a debt-equity ratio of 16%, which is on the low side. 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. 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.
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. 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.
Underperforming the market overall, the Technology sector (XLK) is up 0.3%, and these are its current biggest movers:
| Company | Market Cap | Percentage Change |
| Equinix (Nasdaq:EQIX) | $8.99 billion | +7.3% |
| Constant Contact (Nasdaq:CTCT) | $604.5 million | -5.3% |
| Cirrus Logic (Nasdaq:CRUS) | $2.79 billion | -4% |
| Medidata Solutions (Nasdaq:MDSO) | $965.4 million | +3.6% |
| Kayak (Nasdaq:KYAK) | $1.19 billion | -3.1% |
| Energizer Holdings (NYSE:ENR) | $4.56 billion | -2.8% |
| Littelfuse (Nasdaq:LFUS) | $1.19 billion | -2.5% |
Rising 7.3%, Equinix (Nasdaq:EQIX) is currently trading at $200.08 per share. So far today, the company's volume is 4.1 million shares. This is more trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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 high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's 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.
Currently trading at $18.78 per share, Constant Contact (Nasdaq:CTCT) has fallen 5.3%. At 368,759 shares, the company's volume so far today is 0.9 times the average daily volume. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). CTCT's PEG ratio of 1.07 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.
After a decline of 4%, Cirrus Logic (Nasdaq:CRUS) has hit a share price of $41.38. The company's volume for the day so far is 2.5 million shares. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. CRUS' stock is trading for more than its book value with a P/B ratio of 5.59. 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
Falling 3.1%, Kayak (Nasdaq:KYAK) is currently at a share price of $29.90. So far today, 23,109 shares of the company's stock have changed hands. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. The debt ratio for KYAK is 98.1%, which is relatively high. As such, the company is highly leveraged and not highly liquid. 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.
Energizer Holdings (NYSE:ENR) is trading at $68.76 per share, down 2.8%. At 382,660 shares, the company's volume so far today is 0.7 times its current daily average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. 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 price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. ENR's P/S ratio of 1.05 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. 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.
Slipping 2.5%, Littelfuse (Nasdaq:LFUS) is currently trading at $53.19 per share. This morning, the company is trading a volume of 23,045 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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 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. LFUS has a debt-equity ratio of 16%, which is on the low side. 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. 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.
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. 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.
by
Investopedia Staff
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