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Technology Stocks, Including Trimble, Making Big Moves on September 17, 2012
The market is having a bad day so far. The Nasdaq has slipped 0.2%; the S&P 500 is trading down 0.2%; and the Dow is down 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.
On a bad day for the market overall, the Technology sector (XLK) has shown little change and its biggest movers so far today are:
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Currently trading at $46.59 per share, OpenTable (Nasdaq:OPEN) has fallen 5.3%. The company's volume is currently 265,130 shares for the day, 0.3 times its average over the past 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. 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/sales ratio measures a company's stock market price by its revenues. OPEN has a high P/S ratio of 6.76. This could be a good sign if the share price increases. 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.
BroadSoft (Nasdaq:BSFT) is currently trading at $42.25 per share, a 4.9% increase. The company's volume for the morning is 368,309 shares. This is 0.7 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that 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 debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for BSFT is 51.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Plantronics (NYSE:PLT) is currently trading at a share price of $35.98, a 4.5% decline. The company's volume is currently 69,632 shares for the day, on pace to reach yesterday's volume of 165,239 shares. 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt-equity (D/E) ratio is a leverage ratio. PLT has a debt-equity ratio of 8%, which is on the low side. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
After an increase of 3.4%, PROS Holdings (NYSE:PRO) has reached a current price of $19.75. This morning, the company is trading a volume of 18,837 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). PRO has a P/E ratio of 83.0, high compared to the industry average of 5.13. This could mean that the market is expecting big things over the next few months or years. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Demandware (NYSE:DWRE) is up 3.1% to reach a current price of $32.26 per share. At 208,036 shares, the company's volume so far today is in keeping with the average volume over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. DWRE has a P/B ratio of 10.47 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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: How Buybacks Warps The Price-To-Book Ratio
Slipping 2.9%, Trimble (Nasdaq:TRMB) is currently trading at $51.84 per share. So far this morning, 194,570 shares have changed hands. This is 0.3 times the 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for TRMB is 3.09, which is relatively high. 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.
SINA Corporation (Nasdaq:SINA) has fallen 2.8% and is currently trading at $65.75 per share. So far today, the company's volume is 995,373 shares, while it was 3.7 million shares yesterday. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. SINA has a debt ratio of 22.5%, which is fairly low. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
On a bad day for the market overall, the Technology sector (XLK) has shown little change and its biggest movers so far today are:
| Company | Market Cap | Percentage Change |
| OpenTable (Nasdaq:OPEN) | $1.11 billion | -5.3% |
| BroadSoft (Nasdaq:BSFT) | $1.11 billion | +4.9% |
| Plantronics (NYSE:PLT) | $1.59 billion | -4.5% |
| PROS Holdings (NYSE:PRO) | $523.5 million | +3.4% |
| Demandware (NYSE:DWRE) | $910.5 million | +3.1% |
| Trimble (Nasdaq:TRMB) | $6.71 billion | -2.9% |
| SINA Corporation (Nasdaq:SINA) | $4.49 billion | -2.8% |
Currently trading at $46.59 per share, OpenTable (Nasdaq:OPEN) has fallen 5.3%. The company's volume is currently 265,130 shares for the day, 0.3 times its average over the past 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. 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/sales ratio measures a company's stock market price by its revenues. OPEN has a high P/S ratio of 6.76. This could be a good sign if the share price increases. 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.
BroadSoft (Nasdaq:BSFT) is currently trading at $42.25 per share, a 4.9% increase. The company's volume for the morning is 368,309 shares. This is 0.7 times the average daily volume. If a stock price makes a big move up or down, volume lets us know the significance of that 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 debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for BSFT is 51.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Plantronics (NYSE:PLT) is currently trading at a share price of $35.98, a 4.5% decline. The company's volume is currently 69,632 shares for the day, on pace to reach yesterday's volume of 165,239 shares. 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 provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt-equity (D/E) ratio is a leverage ratio. PLT has a debt-equity ratio of 8%, which is on the low side. This shows that the company's assets are financed primarily through equity. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
After an increase of 3.4%, PROS Holdings (NYSE:PRO) has reached a current price of $19.75. This morning, the company is trading a volume of 18,837 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. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). PRO has a P/E ratio of 83.0, high compared to the industry average of 5.13. This could mean that the market is expecting big things over the next few months or years. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
Demandware (NYSE:DWRE) is up 3.1% to reach a current price of $32.26 per share. At 208,036 shares, the company's volume so far today is in keeping with the average volume over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. DWRE has a P/B ratio of 10.47 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. 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: How Buybacks Warps The Price-To-Book Ratio
Slipping 2.9%, Trimble (Nasdaq:TRMB) is currently trading at $51.84 per share. So far this morning, 194,570 shares have changed hands. This is 0.3 times the 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for TRMB is 3.09, which is relatively high. 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.
SINA Corporation (Nasdaq:SINA) has fallen 2.8% and is currently trading at $65.75 per share. So far today, the company's volume is 995,373 shares, while it was 3.7 million shares yesterday. 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. SINA has a debt ratio of 22.5%, which is fairly low. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
by
Investopedia Staff
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