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Tickers in this Article: NTSP, MOH, CVH, AON, TCBI, SHG, CB
On a good day for the market, the Nasdaq has increased 1.4%, the S&P 500 has climbed 1.1% and the Dow is trading up 0.8%. 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.

The Financial sector (XLF) is up 1.1%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
NetSpend Holdings Inc (Nasdaq:NTSP)$712.6 million-15.4%
Molina Healthcare, Inc. (NYSE:MOH)$1.17 billion-9%
Coventry Health Care (NYSE:CVH)$4.39 billion+8.4%
Aon (NYSE:AON)$15.17 billion+5.4%
Texas Capital Bancshares Inc (Nasdaq:TCBI)$1.55 billion+5.3%
Shinhan Financial Group Co., Ltd. (ADR) (NYSE:SHG)$14.2 billion+3.9%
Chubb (NYSE:CB)$18.78 billion+3.7%
Broker Summary: Fidelity Online Brokerage

Taking a 15.4% hit, NetSpend Holdings (Nasdaq:NTSP) is currently trading at $7.88 per share. So far today, 504,361 shares have changed hands. This is 1.6 times its current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for NTSP is 48.5, above the industry average of 14.06. 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: Investment Valuation Ratios: Price/Earnings Ratio

Falling 9%, Molina Healthcare (NYSE:MOH) is currently at a share price of $23.02. So far today, the company's volume is 1.4 million shares. A stock's volume conveys how excited investors are about it. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. MOH's PEG ratio is 3.39. 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 an increase of 8.4%, Coventry Health Care (NYSE:CVH) has reached a current price of $33.30. At 1.1 million shares, the company's volume so far today is. Volume is used to evaluate how meaningful the price movement of a stock is. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. CVH's stock is trading for more than its book value with a P/B ratio of 1.01. 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Rising 5.4%, Aon (NYSE:AON) is currently trading at $48.99 per share. So far this morning, 1.7 million shares have changed hands. This is 1.4 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for AON is 1.4%, which is on the low end. This could indicate that that the stock is overpriced or that future dividends might be higher. Just as with the yield on a bond or certificate of deposit, the higher the dividend yield, the higher the return to the investor. SEE: Due Diligence On Dividends

Texas Capital Bancshares (Nasdaq:TCBI) has moved up 5.3% and is currently trading at $43.17 per share. With 1.2 million shares changing hands so far today, the company's volume is 2.6 times its current three-month 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 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for TCBI is 3.47, 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. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Shinhan Financial Group Co., Ltd (NYSE:SHG) has risen 3.9% to hit a current price of $62.26 per share. The company's volume for the day so far is 24,871 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 SHG is 91.7%, which is relatively high. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. 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.

Chubb (NYSE:CB) is up 3.7% to reach a current price of $72.14 per share. So far today, the company's volume is 677,265 shares, lighter than yesterday's volume of 1.8 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. CB's debt-equity ratio of 23% is on the low end. 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.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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