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Utilities Sector's Biggest Movers for June 25, 2012
The market is having a bad day so far. The Nasdaq has declined 2%; the S&P 500 has fallen 1.7%; and the Dow has slipped 1.3%. 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 ahead of the overall market, down only 0.6%, and its biggest movers are currently:
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Currently trading at $40.32 per share, Targa (NYSE:TRGP) has fallen 3.7%. So far today, the company's volume is 129,210 shares, 0.3 times the current three-month 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. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. TRGP has a low gross profit margin of 10.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. Net profit margins are those generated from all phases of a business, including taxes. The company's net margin is 0.5%, which is low compared to its gross margin. A low profit margin may indicate a pricing strategy.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for TRGP is 52.3, below the industry average of 65.15. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Profit With The Power Of Price-To-Earnings
Atlas (NYSE:ATLS) has fallen 3.5% and is currently trading at $28.13 per share. The company's volume for the day so far is 176,838 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. 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. ATLS has a low gross profit margin of 20%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Compared with its gross profit margin, ATLS' operating profit margin of 0.3% and net profit margin of 3.1% are low.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. Dividend yield measures the income that a stock will generate for an investor. ATLS' dividend yield is 3.4%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
Copano Energy (Nasdaq:CPNO) is down 3.5% to reach $24.90 per share. So far today, the company's volume is 244,025 shares, 0.8 times its current daily average. 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. CPNO has a low gross profit margin of 13.8%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. CPNO's operating and net profit margins are both negative. This is because the company reported net and operating losses in the most recent quarter.
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 debt ratio is calculated by dividing total liabilities by total assets. CPNO has a debt ratio of 55.6%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Williams Partners (NYSE:WPZ) is currently trading at a share price of $50.03, a 2.5% decline. The company is trading at a volume of 271,295 shares. Trading activity is down from yesterday when 377,273 shares changed hands. Volume is an important indicator because it indicates how significant a price shift is. 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. WPZ's gross profit margin is 36.7%. WPZ's operating margin of 25% and net margin of 20.8% are low relative to its gross margin.
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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The D/E ratio for WPZ is 116%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
At $41.53, Oneok (NYSE:OKE) has slipped 2.5%. The company's volume for the day so far is 491,836 share, 0.3 times its average over the past three months. A stock's volume conveys how excited investors are about it. Margin ratios highlight companies that are worth further examination. OKE has a low gross profit margin of 13.2%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. OKE has an operating profit margin of 9.5% and a net profit margin of 6%, both low compared to its gross profit margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. The capitalization ratio for OKE is 69.8%, which is fairly high. 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.
National Fuel (NYSE:NFG) is trading at $44.15 per share, down 2.5%. So far today, 154,711 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. NFG's gross profit margin is 45.3%. Net profit margin is calculated by dividing net income by sales. The company's net profit margin is 12.9%.
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. 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. NFG has a high P/S ratio of 2.42. This could be a good sign if the share price increases. 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.
Genon Energy (NYSE:GEN) has risen 2% and is currently trading at $1.50 per share. The company's volume is currently 5.5 million shares for the day, 0.3 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. 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. GEN has a low gross profit margin of 21.2%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net margin is -3.3%, relatively low in comparison with its gross profit margin. This is a potential cause for concern, as companies with low profit margins can get wiped out in a downturn.
Investors can use valuation ratios as tools to estimate what kind of deal a particular 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. GEN's P/B ratio of 0.23 indicates that its share price is lower than its book value. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. 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
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. 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 ahead of the overall market, down only 0.6%, and its biggest movers are currently:
| Company | Market Cap | Percentage Change |
| Targa Resources Corp (NYSE:TRGP) | $1.78 billion | -3.7% |
| Atlas Energy LP (NYSE:ATLS) | $1.5 billion | -3.5% |
| Copano Energy, L.L.C. (Nasdaq:CPNO) | $1.86 billion | -3.5% |
| Williams Partners L.P. (NYSE:WPZ) | $16.23 billion | -2.5% |
| Oneok (NYSE:OKE) | $8.85 billion | -2.5% |
| National Fuel Gas Co. (NYSE:NFG) | $3.77 billion | -2.5% |
| Genon Energy Inc (NYSE:GEN) | $1.14 billion | +2% |
Currently trading at $40.32 per share, Targa (NYSE:TRGP) has fallen 3.7%. So far today, the company's volume is 129,210 shares, 0.3 times the current three-month 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. Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. TRGP has a low gross profit margin of 10.1%. This may mean that the company is struggling to control production costs, or that a low amount of earnings is being generated from revenues. Net profit margins are those generated from all phases of a business, including taxes. The company's net margin is 0.5%, which is low compared to its gross margin. A low profit margin may indicate a pricing strategy.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for TRGP is 52.3, below the industry average of 65.15. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Profit With The Power Of Price-To-Earnings
Atlas (NYSE:ATLS) has fallen 3.5% and is currently trading at $28.13 per share. The company's volume for the day so far is 176,838 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. 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. ATLS has a low gross profit margin of 20%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Compared with its gross profit margin, ATLS' operating profit margin of 0.3% and net profit margin of 3.1% are low.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. Dividend yield measures the income that a stock will generate for an investor. ATLS' dividend yield is 3.4%. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Dividend Yield For The Downturn
Copano Energy (Nasdaq:CPNO) is down 3.5% to reach $24.90 per share. So far today, the company's volume is 244,025 shares, 0.8 times its current daily average. 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. CPNO has a low gross profit margin of 13.8%. Investors should track gross profit margin ratios over several years in order to see if earnings are consistent, growing or declining. CPNO's operating and net profit margins are both negative. This is because the company reported net and operating losses in the most recent quarter.
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 debt ratio is calculated by dividing total liabilities by total assets. CPNO has a debt ratio of 55.6%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
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. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. The D/E ratio for WPZ is 116%. Companies with high D/E ratios may have difficulty attracting additional investment capital. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
At $41.53, Oneok (NYSE:OKE) has slipped 2.5%. The company's volume for the day so far is 491,836 share, 0.3 times its average over the past three months. A stock's volume conveys how excited investors are about it. Margin ratios highlight companies that are worth further examination. OKE has a low gross profit margin of 13.2%. A low gross profit margin compared to competitors may be a sign that the company is under-pricing its products and/or services. OKE has an operating profit margin of 9.5% and a net profit margin of 6%, both low compared to its gross profit margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. The capitalization ratio for OKE is 69.8%, which is fairly high. 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.
National Fuel (NYSE:NFG) is trading at $44.15 per share, down 2.5%. So far today, 154,711 shares have changed hands. If a stock price moves on high volume, this means that the change is a significant one. 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. NFG's gross profit margin is 45.3%. Net profit margin is calculated by dividing net income by sales. The company's net profit margin is 12.9%.
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. 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. NFG has a high P/S ratio of 2.42. This could be a good sign if the share price increases. 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.
Genon Energy (NYSE:GEN) has risen 2% and is currently trading at $1.50 per share. The company's volume is currently 5.5 million shares for the day, 0.3 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. 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. GEN has a low gross profit margin of 21.2%. Since gross profit margins tend to stay stable, sudden changes may indicate financial fraud, accounting irregularities or problems in the business. Net profit margin comes as close as possible to summing-up in a single figure how effectively managers run the business. Net margin is -3.3%, relatively low in comparison with its gross profit margin. This is a potential cause for concern, as companies with low profit margins can get wiped out in a downturn.
Investors can use valuation ratios as tools to estimate what kind of deal a particular 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. GEN's P/B ratio of 0.23 indicates that its share price is lower than its book value. This is due to one of two possibilities: that the stock is being unfairly or incorrectly undervalued by investors because of some transitory circumstance and represents an attractive buying opportunity at a bargain price or that the market's low opinion and valuation of the company are correct, at least over the foreseeable future. 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
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. 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
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