The Nasdaq has fallen 0.8%, the S&P 500 has declined 0.7% and the Dow is trading down 0.7%, marking a bad morning for the market. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.
The Consumer Cyclical sector (XLY) is down 0.7%, outperforming the market overall. Currently, the biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|Koninklijke Philips Electronics NV (NYSE:PHG)||$22.76 billion||-4.5%|
|Shanda Games (Nasdaq:GAME)||$997.4 million||+4.2%|
|Tempur-Pedic International (NYSE:TPX)||$1.82 billion||-3.7%|
|Honda Motor Co., Ltd (NYSE:HMC)||$57.42 billion||-3.3%|
|Tata Motors Limited (NYSE:TTM)||$2.38 billion||+3.1%|
|Tesla Motors (Nasdaq:TSLA)||$3 billion||+2.7%|
|Toyota Motor Corporation (NYSE:TM)||$127.07 billion||-2.5%|
Broker Summary: Fidelity Online Brokerage
Slipping 4.5%, Koninklijke Philips Electronics NV (NYSE:PHG) is currently trading at $23.35 per share. With 796,639 shares changing hands so far today, the company's volume is 1.1 times the average volume over the last 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. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. Dividend yield measures the income that a stock will generate for an investor. PHG's dividend yield is 3.3%. 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: Dividend Yield For The Downturn
After an increase of 4.2%, Shanda Games (Nasdaq:GAME) has reached a current price of $3.71. So far today, the company's volume is 145,986 shares. This is a sign that there will be less trading activity than there was yesterday. 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 allow the investor to make a quick determination as to a company's investment value. 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 GAME is a high 1.34. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.
Tempur-Pedic International (NYSE:TPX) has fallen 3.7% and is currently trading at $29.50 per share. So far today, the company's volume is 1.6 million shares, 0.6 times the average daily volume. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift 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. 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 TPX is 8.8, below the industry average of 21.97. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Understanding The P/E Ratio
After a decline of 3.3%, Honda Motor Co., Ltd (NYSE:HMC) has hit a share price of $30.81. So far today, 390,127 shares have changed hands. Volume is used to evaluate how meaningful the price movement of a stock is. 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. 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. HMC has a D/E ratio of 90%. 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.
Tata Motors Limited (NYSE:TTM) is currently trading at $25.44 per share, a 3.1% increase. So far today, the company's volume is 1.3 million shares, 0.8 times the current three-month average. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. TTM's capitalization ratio is 32.7%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
Tesla Motors (Nasdaq:TSLA) is up 2.7% to reach a current price of $29.25 per share. So far today, 1.6 million shares of the company's stock have changed hands. Volume indicates the level of interest that investors have in a company at its current price. 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. The debt ratio is calculated by dividing total liabilities by total assets. TSLA has a high debt ratio of 92%. 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.
Toyota Motor Corporation (NYSE:TM) has decreased to $78.23 per share, a 2.5% fall. The company's volume is currently 268,013 shares for the day, 0.7 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. PEG ratio for TM is consistent with the industry average at 0.4. 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 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.