Currently, the Nasdaq has moved up 0.4%, the S&P 500 is unchanged and the Dow remains relatively unchanged. 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 up 0.3% overall, and these are the biggest movers in the sector so far:
|Company||Market Cap||Percentage Change|
|Crestwood Midstream Partners LP (NYSE:CMLP)||$950.3 million||-3.5%|
|Aqua America Inc (NYSE:WTR)||$3.71 billion||-3.4%|
|Northeast Utilities (NYSE:NU)||$12.72 billion||-2.4%|
|DCP Midstream Partners, LP (NYSE:DPM)||$2.14 billion||+2.4%|
|Exterran Partners, L.P. (Nasdaq:EXLP)||$919.2 million||+2.3%|
|Enbridge Inc. (USA) (NYSE:ENB)||$33.26 billion||-2%|
|Huaneng Power International, Inc. (ADR) (NYSE:HNP)||$9.93 billion||+1.9%|
Broker Summary: E-Trade Financial
Crestwood Midstream (NYSE:CMLP) has fallen 3.5% and is currently trading at $25.09 per share. The company's volume for the day so far is 173,062 shares. This is on pace to reach yesterday's trading volume of 319,187 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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). CMLP's PEG ratio is 2.86. 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.
Currently trading at $25.76 per share, Aqua America (NYSE:WTR) has fallen 3.4%. The company's volume is currently 641,507 shares for the day, in keeping with its current daily average. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. WTR's P/B ratio of 2.82 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. 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
After a decline of 2.4%, Northeast Utilities (NYSE:NU) has hit a share price of $39.59. So far today, the company's volume is 1.3 million 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Dividend yield measures the income that a stock will generate for an investor. Dividend yield for NU is 3.4%. 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: Due Diligence On Dividends
DCP Midstream (NYSE:DPM) has increased to a share price of $42.10, a 2.4% rise. The company's volume is currently 38,212 shares for the day, 0.4 times the average volume over the last three months. 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. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. DPM's P/S ratio of 1.44 is on the high side. 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.
After rising 2.3%, Exterran Partners (Nasdaq:EXLP) is currently trading at a share price of $22.24. So far today, 108,460 shares of the company's stock have changed hands. Yesterday, volume was only 56,258 shares. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. EXLP's debt ratio is 56.7%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Falling 2%, Enbridge Inc (NYSE:ENB) is currently at a share price of $40.88. The company's volume is currently 314,128 shares for the day, in line with the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 debt-equity (D/E) ratio is a leverage ratio. ENB has a high D/E ratio of 295%. Companies in capital-intensive industries usually have higher D/E ratios because they need to buy more property, plants, and equipment to operate. 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.
Huaneng Power International, Inc (NYSE:HNP) has moved up 1.9% and is currently trading at $28.81 per share. So far today, 21,660 shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. 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. 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. HNP has a high capitalization ratio of 67.3%. If the company is a company is in a highly competitive business and hobbled by high debt, it will find its competitors taking advantage of its problems to grab more market share. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.