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Today's Major Real Estate Operations Sector Movers: HF and More

July 20, 2012 | Filed Under » ,
Tickers in this Article » HF, VAC, SIR, LHO, FSRV, JLL, EGP
The market is currently down, with the Nasdaq decreasing 0.7%, the S&P 500 falling 0.7% and the Dow down 0.8%.

The Real Estate Operations sector (IYR) is currently ahead of the overall market, down only 0.3%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
HFF, Inc. (NYSE:HF)$552.3 million-3.1%
Marriott Vacations Worldwide Corp (NYSE:VAC)$1.05 billion-3%
Select Income REIT (NYSE:SIR)$804.3 million-2.7%
LaSalle Hotel Properties (NYSE:LHO)$2.35 billion-2.7%
FirstService Corporation (USA) (Nasdaq:FSRV)$789.9 million-2.5%
Jones Lang LaSalle Incorporated (NYSE:JLL)$3.17 billion-1.9%
Eastgroup Properties Inc (NYSE:EGP)$1.53 billion-1.7%
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HFF (NYSE:HF) is down 3.1% to reach $14.50 per share. The company's volume for the morning is 42,783 shares. This is 0.3 times the average daily volume. 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. 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. The price/sales ratio measures a company's stock market price by its revenues. The P/S ratio for HF is a high 2.33. This could be a good sign if the share price increases. 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.



Marriott Vacations (NYSE:VAC) is currently trading at a share price of $29.68, a 3% decline. The company's volume for the day so far is 45,792 shares, 0.3 times the current three-month 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for VAC is 57.8%. 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.



Select Income (NYSE:SIR) has decreased to $25.08 per share, a 2.7% fall. The company's volume for the day so far is 25,115 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. SIR has a low debt-equity ratio of 3%. 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.



At $26.71, LaSalle Hotel (NYSE:LHO) has slipped 2.7%. This morning, 773,548 shares have been traded, which is likely to result in less activity than yesterday's volume of 2.7 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. LHO's capitalization ratio is 37.1%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.



Slipping 2.5%, FirstService Corporation (Nasdaq:FSRV) is currently trading at $26.83 per share. So far this morning, 3,300 shares have changed hands. This is 0.2 times its current daily average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. FSRV's PEG ratio is 1.26. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.



Currently trading at $71.04 per share, Jones Lang LaSalle (NYSE:JLL) has fallen 1.9%. At 83,790 shares, the company's volume so far today is 0.2 times the average volume over the last three months. 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 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. JLL's P/B ratio of 1.77 shows that its share price is higher than its book value. 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. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: How Buybacks Warps The Price-To-Book Ratio





Falling 1.7%, Eastgroup Properties (NYSE:EGP) is currently at a share price of $52.72. This morning, the company is trading a volume of 40,434 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). EGP has a P/E ratio of 64.6, high compared to the industry average of 14.14. This could mean that the market is expecting big things over the next few months or years. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Investment Valuation Ratios: Price/Earnings Ratio





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. 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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