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Tickers in this Article: HNP, BKH, NGG, DPM, NWN, CLNE, WPZ
The morning has been bad for the market. The Nasdaq has declined 0.1%; the S&P 500 has fallen 0.1%; and the Dow has decreased 0.2%. 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.

As with the overall market, the Utilities sector has shown little movement, but here are its current biggest movers:
CompanyMarket CapPercentage Change
Huaneng Power International, Inc. (ADR) (NYSE:HNP)$9.77 billion+3.2%
Black Hills Corp (NYSE:BKH)$1.36 billion+3.1%
National Grid plc (ADR) (NYSE:NGG)$38.91 billion-2.9%
DCP Midstream Partners, LP (NYSE:DPM)$2.17 billion+2.2%
Northwest Natural Gas Co (NYSE:NWN)$1.26 billion+2%
Clean Energy Fuels Corp. (Nasdaq:CLNE)$1.24 billion-1.7%
Williams Partners L.P. (NYSE:WPZ)$16.92 billion+1.6%
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Huaneng Power International, Inc (NYSE:HNP) is at $28.70 per share after an increase of 3.2%. So far today, the company's volume is 55,103 shares, below yesterday's volume of 106,293 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Margin analysis is a great way to understand the profitability of companies. HNP's gross profit margin is 34.6%. All else being equal, investors should feel more confident investing in a company with a high operating margin than one with a low operating margin. HNP's operating profit margin is 4.6%. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. Net margin is 0.9%.

It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. HNP has a capitalization ratio of 67.3%, which is on the high end. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Increasing 3.1%, Black (NYSE:BKH) is trading at $31.83 per share. So far today, 659,696 shares have changed hands. This is 1.3 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Profit-margin ratios can give investors deeper insight into management efficiency than earnings alone can provide. Gross profit margin, operating profit margin and net margin are commonly used margins. BKH has a gross profit margin of 30.8%. Net profit margin is calculated by dividing net income by sales; the higher the net profit margin, the better. The company's net profit margin is 4.3%.

Valuation ratios allow the investor to make a quick determination as to a company's investment value. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. BKH's PEG ratio is 4.28. 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.

National Grid plc (NYSE:NGG) has decreased to $51.75 per share, a 2.9% fall. So far today, the company's volume is 531,040 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for NGG is 2.5, indicating that the stock is trading for more 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. P/B value comparisons should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

DCP Midstream (NYSE:DPM) has risen 2.2% and is currently trading at $42.56 per share. The company's volume is currently 27,814 shares for the day, 0.4 times the average daily volume. 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 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. Margin ratios highlight companies that are worth further examination. DPM has a low gross profit margin of 15.5%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. DPM's operating margin of 5.9% and net margin of 7.9% are low relative to its gross margin.

Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. DPM's dividend yield is 6.3%. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing

Northwest Natural (NYSE:NWN) is currently trading at $47.80 per share, a 2% increase. The company's volume for the day so far is 170,076 shares. This is less trading activity than there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. The gross profit margin for NWN is 29.2%. Net profit margin is calculated by dividing net income by sales. The company has a net profit margin of 7.6%, which is low relative to its gross profit margin. A low net profit margin may be a sign of a price war that is lowering profits.

When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. While measuring a price/earnings ratio (P/E ratio) is a popular valuation technique, the measure cannot be calculated for companies without earnings, so some investors analyze the price/sales ratio. The P/S ratio for NWN is a high 1.44. 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.

Currently trading at $14.12 per share, Clean Energy (Nasdaq:CLNE) has fallen 1.7%. So far today, the company's volume is 538,123 shares, 0.5 times the average volume over the last three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. CLNE has a gross profit margin of 25.2%. Both CLNE's operating and net profit margins are negative. This is because the company reported net and operating losses in the most recent quarter.

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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. CLNE has a low debt ratio of 43.9%. 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.

Williams Partners (NYSE:WPZ) has risen 1.6% to hit a current price of $54.41 per share. The company's volume for the day so far is 146,194 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. The gross profit margin for WPZ is 36.7%. Relative to its gross profit margin, WPZ's operating profit margin of 25% and net profit margin of 20.8% are low.

Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. WPZ has a high D/E ratio of 116%. 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.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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