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Tickers in this Article: GNRC, AYI, OPEN, CRUS, TUDO, VECO
The market is having a bad day so far. The Nasdaq has fallen 0.2%; the S&P 500 has declined 0.2%; and the Dow is trading down 0.5%. 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.

Despite a bad day for the market overall so far, the Technology sector (XLK) is up 0.1% and its biggest movers are currently:
Company Market Cap Percentage Change
Generac Holdings Inc. (NYSE:GNRC) $1.63 billion -16.7%
Acuity Brands, Inc. (NYSE:AYI) $2.16 billion +13%
OpenTable Inc (Nasdaq:OPEN) $1.02 billion -8.9%
Cirrus Logic, Inc. (Nasdaq:CRUS) $1.92 billion -6.2%
Tudou Hldg Ltd (ADR) (Nasdaq:TUDO) $950.5 million -5.4%
Veeco Instruments Inc. (Nasdaq:VECO) $1.34 billion +4.7%
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Acuity Brands (NYSE:AYI) is currently at $57.52 per share after a dramatic increase of 13%. At 712,012 shares, the company's volume so far today is 1.5 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock 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. AYI's gross profit margin is 42.7%. The operating profit margin is a rough measure of the operating leverage a company can achieve in the conduct of the operational part of its business. Operating profit margin for AYI is 8.5%. Ideally, a company's profit margin should be stable or rising; declining profit margin should be cause for concern or further investigation. Net margin is 5.9%.

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. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. AYI's stock is trading for more than its book value with a P/B ratio of 3.06. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: How Buybacks Warps The Price-To-Book Ratio

 

 

After a decline of 8.9%, OpenTable (Nasdaq:OPEN) has hit a share price of $40.99. So far today, 522,376 shares have changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Margin ratios highlight companies that are worth further examination. OPEN has a gross profit margin of 80.7%, which is on the high end. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. OPEN's operating margin of 18.8% and net margin of 15.3% are high relative to its gross margin.

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/sales ratio measures a company's stock market price by its revenues. OPEN has a high P/S ratio of 6.29. 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.

 

Slipping 6.2%, Cirrus Logic (Nasdaq:CRUS) is currently trading at $28 per share. So far today, the company's volume is 1.4 million shares, 0.6 times its average over the past three months. 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 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 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. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CRUS has a debt ratio of 14.4%, 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.

 

Falling 5.4%, Tudou Hldg Ltd (Nasdaq:TUDO) is currently at a share price of $31.71. The company's volume for the day so far is 37,699 shares. This is greater than yesterday's volume of 21,379 shares. Volume is an important indicator because it indicates how significant a price shift is. Margin analysis is a great way to understand the profitability of companies. TUDO's operating profit margin is -94.6%. This is because the company reported a net operating loss in the most recent quarter.

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 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. The debt-equity ratio of 8% is relatively low. This shows that the company's assets are financed primarily through equity. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

 

Increasing 4.7%, Veeco Instruments (Nasdaq:VECO) is trading at $35.96 per share. The company's volume is currently 427,469 shares for the day, 0.5 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. VECO's gross profit margin is 43.2%. 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. VECO has an operating profit margin of 15%. Because the business models of companies vary so widely, it can be difficult to compare net profit margin ratios for companies in different industries. The company has a net profit margin of 10.6%.

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. 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. VECO has a low capitalization ratio of 0.3%. Investors generally consider a company with low debt and high equity levels is a good quality investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

 

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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