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Tickers in this Article: ASPS, HNT, BLK, UNH, MSCI, MA, WLP
On a good day for the market, the Nasdaq has climbed 0.2%, the S&P 500 has moved up 0.5% and the Dow is up 0.5%. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

The Financial sector (XLF) is up 0.6%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
Altisource Portfolio Solutions (Nasdaq:ASPS)$2.66 billion-3.1%
Health Net (NYSE:HNT)$2.02 billion-2.1%
BlackRock (NYSE:BLK)$31.78 billion+1.8%
UnitedHealth (NYSE:UNH)$59.87 billion-1.5%
Msci (NYSE:MSCI)$3.33 billion-1.4%
MasterCard (NYSE:MA)$56.84 billion+1.4%
WellPoint (NYSE:WLP)$20.21 billion-1.4%
Broker Summary: Fidelity Online Brokerage

Altisource Portfolio Solutions (Nasdaq:ASPS) has decreased to $110.61 per share, a 3.1% fall. The company's volume for the day so far is 165,253 shares. 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 price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. ASPS' PEG ratio is 1.49. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Health Net (NYSE:HNT) is currently trading at a share price of $24.25, a 2.1% decline. The company's volume is currently 119,981 shares for the day, 0.1 times the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. The price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. HNT has a P/B ratio of 1.28 which shows that its share price is higher 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. 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: Using The Price-To-Book Ratio To Evaluate Companies

Rising 1.8%, BlackRock (NYSE:BLK) is currently trading at $187.42 per share. The company's volume for the day so far is 804,300 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. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. Relative to the industry P/E ratio of 21.61, BLK's 14.7 is low. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. 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: Understanding The P/E Ratio

Slipping 1.5%, UnitedHealth (NYSE:UNH) is currently trading at $57.10 per share. With 2.7 million shares changing hands so far today, the company's volume is 0.4 times the 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for UNH is 0.57, which is relatively low. Low P/S ratios are more attractive than high ratios because this indicates that an investor is paying less for each dollar of sales. 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.

Msci (NYSE:MSCI) is trading at $26.96 per share, down 1.4%. This morning, the company is trading a volume of 312,962 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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 ratio is calculated by dividing total liabilities by total assets. MSCI's debt ratio is 52.9%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Increasing 1.4%, MasterCard (NYSE:MA) is trading at $481.40 per share. The company's volume is currently 384,285 shares for the day, consistent with its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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. MA has a low dividend yield of 0.3%. This may indicate that the company's stock is overpriced. For income-oriented investors such as retirees, a stock with a high dividend yield may be more attractive than a stock with a low dividend yield. SEE: Dividend Yield For The Downturn

Currently trading at $61.32 per share, WellPoint (NYSE:WLP) has fallen 1.4%. The company's volume is currently 1.8 million shares. This is on pace to fall short of yesterday's volume of 7.7 million shares. If a stock price moves on high volume, this means that the change is a significant one. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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). WLP has a PEG ratio of 0.79, which is consistent with the industry average. 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.

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.

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