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Tickers in this Article: GEN, NRG, MWE, NGG, WPZ, SRE, ALE
The market is having a bad day so far. The Nasdaq is trading down 1.9%; the S&P 500 is down 1.3%; and the Dow has slipped 1.1%. 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 down 0.8%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
Genon Energy Inc (NYSE:GEN)$1.41 billion+24.7%
NRG Energy (NYSE:NRG)$4.11 billion+8.1%
Markwest Energy Partners LP (NYSE:MWE)$6.73 billion-3.4%
National Grid plc (ADR) (NYSE:NGG)$37.5 billion-2.4%
Williams Partners L.P. (NYSE:WPZ)$17.45 billion-2.2%
Sempra Energy (NYSE:SRE)$17.04 billion-1.9%
ALLETE Inc (NYSE:ALE)$1.6 billion-1.7%
Forex Broker Summary: Forex Capital Markets (FXCM)

Genon Energy (NYSE:GEN) rose a significant 24.7% to reach $2.27 per share. So far today, 79.6 million shares have changed hands, above yesterday's volume of 14 million shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. 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. GEN has a low P/S ratio of 0.46. A company with a lower P/S ratio is generally considered more attractive, since investors are paying less for each dollar of sales. 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.

Increasing 8.1%, NRG (NYSE:NRG) is trading at $19.50 per share. The company's volume for the morning is 12.2 million shares. This is 4.7 times the current daily average. 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. 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 debt ratio is calculated by dividing total liabilities by total assets. NRG's debt ratio of 74.4% is fairly high. This means that most of the company's assets are financed through debt. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Markwest Energy (NYSE:MWE) is currently trading at a share price of $53, a 3.4% decline. The company's volume for the day so far is 305,154 shares, 0.7 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. 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 debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. MWE's D/E ratio is 100%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

After a decline of 2.4%, National Grid plc (NYSE:NGG) has hit a share price of $50.15. The company is currently trading a volume of 429,441 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. The capitalization ratio for NGG is 69%, which is fairly high. A high capitalization ratio is not necessarily bad since higher financial leverage can increase the return on a shareholder's investment. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.

Williams Partners (NYSE:WPZ) is down 2.2% to reach $53.99 per share. So far today, the company's volume is 194,133 shares, consistent with the volume from yesterday. A stock's volume conveys how excited investors are about it. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. 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. Dividend yield for WPZ is 5.6%. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Guide To Stock-Picking Strategies: Income Investing

Slipping 1.9%, Sempra Energy (NYSE:SRE) is currently trading at $69.37 per share. The company's volume for the day so far is 406,227 shares. This is consistent with its current daily average. 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. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. SRE's PEG ratio of 1.88 is in line 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.

ALLETE (NYSE:ALE) is trading at $41.28 per share, down 1.7%. The company's volume is currently 56,283 shares for the day, in keeping with the average volume over the past three months. The trading volume for a stock indicates the level of investor interest. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. ALE has a P/B ratio of 1.41 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Using The Price-To-Book Ratio To Evaluate Companies

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Daily stock performance should be weighed against historical performance and put in context of the market overall. 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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