On a good day for the market, the Nasdaq is trading up 1.1%, the S&P 500 is up 1.3% and the Dow has increased 1.4%. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.

The Healthcare sector (XLV) is up 0.9%, underperforming the market overall. The biggest movers in the sector are currently:

CompanyMarket CapPercentage Change
Meridian Bioscience, Inc. (Nasdaq:VIVO)$763.7 million-9.7%
Chemed Corporation (NYSE:CHE)$1.18 billion+7.4%
PSS World Medical, Inc. (Nasdaq:PSSI)$1.09 billion-7%
Varian Medical Systems (NYSE:VAR)$6.39 billion-5.1%
Covidien (NYSE:COV)$24.67 billion+5%
CONMED Corporation (Nasdaq:CNMD)$766.9 million-4.9%
CR Bard (NYSE:BCR)$8.67 billion-4.7%
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Meridian Bioscience (Nasdaq:VIVO) has fallen 9.7% and is currently trading at $16.72 per share. The company's volume for the day so far is 220,924 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. Dividend yield measures the income that a stock will generate for an investor. Dividend yield for VIVO is 4.1%. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Guide To Stock-Picking Strategies: Income Investing

Chemed (NYSE:CHE) is currently trading at $65.69 per share, a 7.4% increase. The company's volume for the day so far is 257,244 shares, 2.5 times the current three-month average. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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 CHE is 0.87, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. 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.

Falling 7%, PSS World Medical (Nasdaq:PSSI) is currently at a share price of $20.10. So far today, the company's volume is 2.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that 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. PSSI has a debt ratio of 66.5%, which is on the high side. 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. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Varian (NYSE:VAR) is down 5.1% to reach $54.38 per share. At 3.3 million shares, the company's volume so far today is 3.1 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. VAR has a fairly low capitalization ratio of 0.4%. Low leverage is a significant balance sheet strength, a sign of a less risky 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.

Covidien (NYSE:COV) is at $53.73 per share after an increase of 5%. So far today, the company's volume is 3.7 million shares. Yesterday, volume was only 2.6 million shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. COV has a debt-equity ratio of 41%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. 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.

CONMED (Nasdaq:CNMD) is currently trading at a share price of $25.77, a 4.9% decline. So far today, the company's volume is 124,387 shares, 1.8 times its average over the past three months. 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. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. CNMD has a P/E ratio of 387.3. 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: Understanding The P/E Ratio

CR (NYSE:BCR) is trading at $98.47 per share, down 4.7%. So far today, 820,760 shares 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. 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. 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). PEG ratio for BCR is 2.78. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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Tickers in this Article: VIVO, CHE, PSSI, VAR, COV, CNMD, BCR

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