Free Annual Reports
TransCanada Corporation and More Big Movers in Utilities on August 22, 2012
It's been a bad day for the market after the morning's trading. The Nasdaq has decreased 0.2%; the S&P 500 has fallen 0.4%; and the Dow is down 0.5%. The utilities sector is a category of stocks for utilities such as gas and power. It contains companies such as electric, gas and water firms and integrated providers. Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.
The Utilities sector (XLU) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
Broker Summary: Fidelity Online Brokerage
Huaneng Power International, Inc (NYSE:HNP) is trading at $27.50 per share, down 3.3%. So far today, the company's volume is 18,056 shares, lighter than yesterday's volume of 69,146 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. The P/E ratio for HNP is 27.9, above the industry average of 3.12. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings
At $45.54, TC (NYSE:TCP) has slipped 1.2%. This morning, the company is trading a volume of 24,325 shares. This is in keeping with its current three-month 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. TCP has a PEG ratio of -14.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Oneok (NYSE:OKS) is down 1.2% to reach $56.00 per share. The company's volume is currently 35,407 shares for the day, 0.2 times its current daily average. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. OKS' stock is trading for more than its book value with a P/B ratio of 2.75. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Covanta (NYSE:CVA) is at $17.84 per share after an increase of 1.2%. The company is currently trading a volume of 286,250 shares. 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for CVA is 3.4%. It is important to remember that dividends are only one component of a stock's return and capital appreciation (or decline) must also be considered when evaluating a security. SEE: Due Diligence On Dividends
Empresa Nacional de Electricidad (NYSE:EOC) has fallen 1.1% and is currently trading at $50 per share. The company's volume is currently 30,473 shares for the day, on pace to finish the day below yesterday's volume of 168,098 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. EOC's D/E ratio is 74%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Currently trading at $51.20 per share, Markwest Energy (NYSE:MWE) has fallen 1.1%. So far today, 238,147 shares have changed hands. This is 0.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 measures the leverage of a company, and a company's leverage is a good way to assess risk. MWE has a debt ratio of 55.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Slipping 1.1%, TransCanada Corporation (NYSE:TRP) is currently trading at $45.76 per share. The company's volume is currently 83,678 shares for the day, 0.2 times the current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. TRP's P/S ratio of 3.38 is on the high side. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. 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 Utilities sector (XLU) is currently lagging behind the overall market, down 0.3%, and its current biggest movers are:
| Company | Market Cap | Percentage Change |
| Huaneng Power International, Inc (NYSE:HNP) | $9.99 billion | -3.3% |
| TC (NYSE:TCP) | $2.47 billion | -1.2% |
| Oneok (NYSE:OKS) | $12.46 billion | -1.2% |
| Covanta (NYSE:CVA) | $2.34 billion | +1.2% |
| Empresa Nacional de Electricidad (NYSE:EOC) | $13.83 billion | -1.1% |
| Markwest Energy (NYSE:MWE) | $5.73 billion | -1.1% |
| TransCanada Corporation (NYSE:TRP) | $32.59 billion | -1.1% |
Huaneng Power International, Inc (NYSE:HNP) is trading at $27.50 per share, down 3.3%. So far today, the company's volume is 18,056 shares, lighter than yesterday's volume of 69,146 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. The P/E ratio for HNP is 27.9, above the industry average of 3.12. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings
At $45.54, TC (NYSE:TCP) has slipped 1.2%. This morning, the company is trading a volume of 24,325 shares. This is in keeping with its current three-month 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. TCP has a PEG ratio of -14.43. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Oneok (NYSE:OKS) is down 1.2% to reach $56.00 per share. The company's volume is currently 35,407 shares for the day, 0.2 times its current daily average. 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 price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. OKS' stock is trading for more than its book value with a P/B ratio of 2.75. 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies
Empresa Nacional de Electricidad (NYSE:EOC) has fallen 1.1% and is currently trading at $50 per share. The company's volume is currently 30,473 shares for the day, on pace to finish the day below yesterday's volume of 168,098 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. EOC's D/E ratio is 74%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Currently trading at $51.20 per share, Markwest Energy (NYSE:MWE) has fallen 1.1%. So far today, 238,147 shares have changed hands. This is 0.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 measures the leverage of a company, and a company's leverage is a good way to assess risk. MWE has a debt ratio of 55.3%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Slipping 1.1%, TransCanada Corporation (NYSE:TRP) is currently trading at $45.76 per share. The company's volume is currently 83,678 shares for the day, 0.2 times the current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. TRP's P/S ratio of 3.38 is on the high side. 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.
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. 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
Investopedia.com believes that individuals can excel at managing their financial affairs. As such, we strive to provide free educational content and tools to empower individual investors, including thousands of original and objective articles and tutorials on a wide variety of financial topics.
Free Annual Reports
