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Today's Major Services Sector Movers: CMG and More
The market is currently down, with the Nasdaq decreasing 0.7%, the S&P 500 down 0.7% and the Dow slipping 0.8%.
The Services sector (IYC) is down 0.8%, underperforming the market overall. The current biggest movers in the sector are:
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Chipotle Mexica (NYSE:CMG) is currently trading at $312.37 per share, after a steep drop of 22.7%. So far this morning, 6.1 million shares have changed hands. This is 10 times its average daily volume. Volume indicates the level of interest that investors have in a company at its current price. 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. 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. CMG's P/E ratio of 54.8 is above the industry average of 21.42. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
New Oriental Education & Tech Grp (NYSE:EDU) has soared 12% to reach a current price of $12.54 per share. This morning, 9.3 million shares have been traded, while it was 48.2 million shares yesterday. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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 EDU is consistent with the industry average at 0.46. 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.
Whole Foods Market (Nasdaq:WFM) is currently trading at a share price of $85.09, a 6% decline. The company is currently trading a volume of 3.9 million shares. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. WFM's P/B ratio of 4.52 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
China Unicom (Hong Kong) Limited (NYSE:CHU) has increased to a share price of $13.78, a 5.4% rise. The company's volume is currently 468,906 shares for the day, 0.7 times the average volume over the last three months. The trading volume for a stock indicates the level of investor interest. 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. Dividend yield is a way to measure how much cash flow you are getting for each dollar invested in an equity position - in other words, how much "bang for your buck" you are getting from dividends. CHU's dividend yield of 1.1% is fairly low. This may indicate that the company's stock is overpriced. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Guide To Stock-Picking Strategies: Income Investing
Slipping 5.1%, Buffalo Wild (Nasdaq:BWLD) is currently trading at $81.18 per share. The company's volume for the morning is 671,503 shares. This is 1.2 times the current daily 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. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for BWLD is a low 32.2%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Panera (Nasdaq:PNRA) has fallen 4.7% and is currently trading at $143.68 per share. At 1.2 million shares, the company's volume so far today is whereas yesterday, volume was only 317,829 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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/sales ratio measures a company's stock market price by its revenues. The P/S ratio for PNRA is a high 2.52. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Lululemon Athletica (Nasdaq:LULU) is trading at $56.56 per share, down 4.6%. So far today, 1.5 million shares have changed hands. 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 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. 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. The P/B ratio for LULU is 12.19, indicating that the stock is trading for more than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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. 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.
The Services sector (IYC) is down 0.8%, underperforming the market overall. The current biggest movers in the sector are:
| Company | Market Cap | Percentage Change |
| Chipotle Mexican Grill, Inc. (NYSE:CMG) | $12.8 billion | -22.7% |
| New Oriental Education & Tech Grp (ADR) (NYSE:EDU) | $1.77 billion | +12% |
| Whole Foods Market, Inc. (Nasdaq:WFM) | $16.62 billion | -6% |
| China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) | $30.8 billion | +5.4% |
| Buffalo Wild Wings (Nasdaq:BWLD) | $1.59 billion | -5.1% |
| Panera Bread Co (Nasdaq:PNRA) | $4.48 billion | -4.7% |
| Lululemon Athletica inc. (Nasdaq:LULU) | $6.32 billion | -4.6% |
Chipotle Mexica (NYSE:CMG) is currently trading at $312.37 per share, after a steep drop of 22.7%. So far this morning, 6.1 million shares have changed hands. This is 10 times its average daily volume. Volume indicates the level of interest that investors have in a company at its current price. 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. 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. CMG's P/E ratio of 54.8 is above the industry average of 21.42. 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. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
New Oriental Education & Tech Grp (NYSE:EDU) has soared 12% to reach a current price of $12.54 per share. This morning, 9.3 million shares have been traded, while it was 48.2 million shares yesterday. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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 EDU is consistent with the industry average at 0.46. 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.
Whole Foods Market (Nasdaq:WFM) is currently trading at a share price of $85.09, a 6% decline. The company is currently trading a volume of 3.9 million shares. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. WFM's P/B ratio of 4.52 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
Slipping 5.1%, Buffalo Wild (Nasdaq:BWLD) is currently trading at $81.18 per share. The company's volume for the morning is 671,503 shares. This is 1.2 times the current daily 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. 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 debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for BWLD is a low 32.2%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Panera (Nasdaq:PNRA) has fallen 4.7% and is currently trading at $143.68 per share. At 1.2 million shares, the company's volume so far today is whereas yesterday, volume was only 317,829 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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/sales ratio measures a company's stock market price by its revenues. The P/S ratio for PNRA is a high 2.52. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.
Lululemon Athletica (Nasdaq:LULU) is trading at $56.56 per share, down 4.6%. So far today, 1.5 million shares have changed hands. 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 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. 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. The P/B ratio for LULU is 12.19, indicating that the stock is trading for more than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies
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. 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.
by
Investopedia Staff
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