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Tickers in this Article: RPXC, KCG, RATE, GTS, ALL, VRSK, HUM
The market has been doing well after the morning's trading. The Nasdaq has increased 0.1%; the S&P 500 has climbed 0.5%; and the Dow is up 0.4%. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

Outperforming the market overall, the Financial sector (XLF) is up 0.5% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
RPX Corp (Nasdaq:RPXC)$629.2 million-20.4%
Knight Capital Group Inc. (NYSE:KCG)$1.01 billion-15.2%
Bankrate Inc (NYSE:RATE)$1.59 billion+9.1%
Triple-S Management Corp. (NYSE:GTS)$518 million+7%
Allstate (NYSE:ALL)$16.82 billion+6.4%
Verisk Analytics, Inc. (Nasdaq:VRSK)$8.34 billion-5%
Humana (NYSE:HUM)$10.05 billion+3.8%
Forex Broker Summary: UFXMarkets

Shares of RPX (Nasdaq:RPXC) are currently trading at $9.99, a steep decline of 20.4%. The company's volume is currently 1.3 million shares. Yesterday's volume was only 251,571 shares. 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. 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). RPXC has a PEG ratio of 0.9. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Knight Capital Group (NYSE:KCG) is at a share price of $8.76 after a sharp decline of 15.2%. The company's volume for the day so far is 14.5 million shares, 8.2 times its average over the past three months. 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 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. KCG has a P/B ratio of 0.58, which shows that its book value is higher than its share price. This could mean that either the market believes the asset value is overstated, or the company is earning a very poor (even negative) return on its assets. 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: Investment Valuation Ratios: Price/Book Value Ratio

After rising 9.1%, Bankrate (NYSE:RATE) is currently trading at a share price of $17.40. The company's volume for the day so far is 1.7 million shares. 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 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/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. RATE has a high P/S ratio of 5.5. 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.

Increasing 7%, Triple-S (NYSE:GTS) is trading at $19.49 per share. The company's volume is currently 20,456 shares for the day, 0.4 times the current daily average. 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. 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 gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. GTS has a debt ratio of 65.5%, which is on the high side. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Allstate (NYSE:ALL) is up 6.4% to reach a current price of $36.50 per share. So far today, five million shares of the company's stock have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for ALL is 16.7, above the industry average of 11.6. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: The P/E Ratio: A Good Market-Timing Indicator

Verisk Analytics (Nasdaq:VRSK) has fallen 5% and is currently trading at $47.74 per share. The company's volume is currently 1.1 million shares for the day, 1.9 times the average volume over the last three months. 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. 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. VRSK has a capitalization ratio of 100.9%, which is on the high end. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Humana (NYSE:HUM) is at $63.92 per share after an increase of 3.8%. This morning, the company is trading a volume of 6.2 million shares. 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. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. HUM's PEG ratio of 0.89 is in line with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

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.

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