The Nasdaq is down 0.2%, the S&P 500 is trading down 0.4% and the Dow has slipped 0.6% on a bad morning for the market. 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 0.9%, underperforming the market overall. The current biggest movers in the sector are:
|Company||Market Cap||Percentage Change|
|Companhia de Saneamento Basico (NYSE:SBS)||$10.42 billion||-1.9%|
|Atmos (NYSE:ATO)||$3.21 billion||-1.7%|
|Brookfield Infrastructure Partners (NYSE:BIP)||$5.27 billion||-1.6%|
|Calpine (NYSE:CPN)||$8.16 billion||+1.5%|
|Alliant (NYSE:LNT)||$5.03 billion||-1.5%|
|Exterran Partners (Nasdaq:EXLP)||$920.1 million||+1.5%|
|National Fuel (NYSE:NFG)||$4.19 billion||-1.5%|
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At $89.71, Companhia de Saneamento Basico (NYSE:SBS) has slipped 1.9%. So far today, the company's volume is 123,652 shares, consistent with its 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 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. SBS' P/S ratio of 1.58 is on the high side. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
After a decline of 1.7%, Atmos (NYSE:ATO) has hit a share price of $35.02. The company is currently trading a volume of 79,604 shares. The trading volume for a stock indicates the level of investor interest. 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. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. ATO has a PEG ratio of 3.62, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
Brookfield Infrastructure Partners (NYSE:BIP) has fallen 1.6% and is currently trading at $36.10 per share. At 325,661 shares, the company's volume so far today is 1.2 times the current three-month average. Volume is used to evaluate how meaningful the price movement of a stock is. 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-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. BIP has a high D/E ratio of 141%. 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.
Calpine (NYSE:CPN) is at $17.75 per share after an increase of 1.5%. So far today, 1.2 million shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. 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. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. CPN's debt ratio of 78.4% is fairly high. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
Currently trading at $44.66 per share, Alliant (NYSE:LNT) has fallen 1.5%. So far today, the company's volume is 134,758 shares, 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 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. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. The P/E ratio for LNT is 18.2, above the industry average of 3.12. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. 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: Investment Valuation Ratios: Price/Earnings Ratio
Exterran Partners (Nasdaq:EXLP) is currently trading at $22.09 per share, a 1.5% increase. So far today, 13,209 shares have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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 EXLP is 58.3%, 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. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.
National Fuel (NYSE:NFG) is currently trading at a share price of $49.59, a 1.5% decline. So far today, the company's volume is 57,719 shares, 0.2 times its average over the past three months. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. NFG's stock is trading for more than its book value with a P/B ratio of 2.08. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. 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 On any given day, a particular stock may see positive or negative change in its share price. Daily stock performance should be weighed against historical performance and put in context of the market overall. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.