This morning's trading has marked a bad day for the market so far. The Nasdaq has declined 1.9%; the S&P 500 has fallen 1.3%; and the Dow has slipped 1.1%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.
The Technology sector (XLK) is down 1.5%, outperforming the market overall. Currently, the biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|Semiconductor Manufacturing Int\'l (ADR) (NYSE:SMI)||$818.5 million||+12.1%|
|Eaton (NYSE:ETN)||$13.19 billion||+6.5%|
|Citrix Systems (Nasdaq:CTXS)||$15.03 billion||-5.1%|
|SXC Health Solutions Corp. (USA) (Nasdaq:CTRX)||$9.2 billion||-4.7%|
|Baidu (Nasdaq:BIDU)||$38.47 billion||-3.7%|
|Luminex Corporation (Nasdaq:LMNX)||$706.7 million||+3.5%|
|Salesforce.com (NYSE:CRM)||$18.65 billion||-3.4%|
Broker Summary: E-Trade Financial
After a big jump of 12.1%, Semiconductor Manufacturing Int'l (NYSE:SMI) is trading at $1.67 per share. The company's volume is currently 138,078 shares for the day, 1.2 times its average over the past three months. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. SMI's debt ratio of 44% is on the low side. A low debt ratio means the company has more available cash flow. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Eaton (NYSE:ETN) has increased to a share price of $41.60, a 6.5% rise. So far today, 4.7 million shares have changed hands. A stock's volume conveys how excited investors are about it. 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. 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. The debt-equity ratio of 47% is relatively low. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
After a decline of 5.1%, Citrix (Nasdaq:CTXS) has hit a share price of $76.64. This morning, 1.7 million shares have been traded, whereas yesterday, volume was only 1.6 million shares. The trading volume for a stock indicates the level of investor interest. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). CTXS has a PEG ratio of 2.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
SXC Health Solutions Corp (Nasdaq:CTRX) is currently trading at a share price of $85.68, a 4.7% decline. So far this morning, 669,476 shares have changed hands. This is 0.7 times the current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. CTRX's stock is trading for more than its book value with a P/B ratio of 8.3. 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. 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: How Buybacks Warps The Price-To-Book Ratio
Currently trading at $106.18 per share, Baidu (Nasdaq:BIDU) has fallen 3.7%. So far today, the company's volume is 2.5 million shares, consistent with its average over the last three months. 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. BIDU's P/E ratio of 45.6 is under the industry average of 84.63. A low P/E ratio may indicate that the market expects relatively slower earnings growth. 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: Can Investors Trust the P/E Ratio?
Luminex (Nasdaq:LMNX) is currently trading at $17.54 per share, a 3.5% increase. So far today, the company's volume is 207,749 shares. 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 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. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for LMNX is a high 5.04. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Salesforce.com (NYSE:CRM) is trading at $130.59 per share, down 3.4%. At 1.2 million shares, the company's volume so far today is. 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 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 debt ratio shows the proportion of assets that a company is financing through debt. CRM's debt ratio is 56.5%. 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.
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.