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Utilities Stocks, Including Consolidated Edison, Making Big Moves on September 26, 2012
The Nasdaq has declined 1%, the S&P 500 is trading down 0.5% and the Dow has fallen 0.2%, marking 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.
Despite a bad day for the market overall so far, the Utilities sector (XLU) is up 0.6% and its biggest movers are currently:
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Rising 4%, Korea Electric Power Corporation (NYSE:KEP) is currently trading at $12.29 per share. This morning, the company is trading a volume of 927,023 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. KEP has a debt ratio of 63.5%, which is on the high side. 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.
TC (NYSE:TCP) is trading at $44.71 per share, down 1.7%. At 51,360 shares, the company's volume so far today is 0.6 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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. PEG ratio for TCP is -14.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
NRG (NYSE:NRG) is currently trading at a share price of $21.37, a 1.6% decline. The company's volume is currently 1.3 million shares. This is on pace to fall short of yesterday's volume of five million shares. 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. 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. 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. NRG's stock is trading for less than its book value as can be seen from it's P/B value of 0.65. 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 has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
At $52.80, National Fuel (NYSE:NFG) has slipped 1.5%. At 176,178 shares, the company's volume so far today is 0.7 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The dividend yield is calculated by dividing a company's dividends per share by its stock price. NFG's dividend yield is 2.7%. 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: Investment Valuation Ratios: Dividend Yield
Consolidated Edison (NYSE:ED) has risen 1.4% and is currently trading at $60.30 per share. The company's volume for the day so far is 1.1 million 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 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ED has a high P/S ratio of 1.46. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Oneok (NYSE:OKE) has moved up 1.3% and is currently trading at $47.74 per share. The company's volume is currently 414,711 shares for the day, in keeping with the average volume over the past three months. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. The P/E ratio for OKE is 28.2, above the industry average of 15.44. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
DTE Energy (NYSE:DTE) is currently trading at $60.48 per share, a 1.3% increase. So far today, 387,314 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. DTE has a high D/E ratio of 113%. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
Despite a bad day for the market overall so far, the Utilities sector (XLU) is up 0.6% and its biggest movers are currently:
| Company | Market Cap | Percentage Change |
| Korea Electric Power Corporation (NYSE:KEP) | $15.16 billion | +4% |
| TC (NYSE:TCP) | $2.43 billion | -1.7% |
| NRG (NYSE:NRG) | $4.95 billion | -1.6% |
| National Fuel (NYSE:NFG) | $4.47 billion | -1.5% |
| Consolidated Edison (NYSE:ED) | $17.42 billion | +1.4% |
| Oneok (NYSE:OKE) | $9.66 billion | +1.3% |
| DTE Energy (NYSE:DTE) | $10.26 billion | +1.3% |
Rising 4%, Korea Electric Power Corporation (NYSE:KEP) is currently trading at $12.29 per share. This morning, the company is trading a volume of 927,023 shares. Volume is used to evaluate how meaningful the price movement of a stock is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. KEP has a debt ratio of 63.5%, which is on the high side. 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.
TC (NYSE:TCP) is trading at $44.71 per share, down 1.7%. At 51,360 shares, the company's volume so far today is 0.6 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. 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. PEG ratio for TCP is -14.61. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.
NRG (NYSE:NRG) is currently trading at a share price of $21.37, a 1.6% decline. The company's volume is currently 1.3 million shares. This is on pace to fall short of yesterday's volume of five million shares. 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. 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. 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. NRG's stock is trading for less than its book value as can be seen from it's P/B value of 0.65. 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 has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Investment Valuation Ratios: Price/Book Value Ratio
At $52.80, National Fuel (NYSE:NFG) has slipped 1.5%. At 176,178 shares, the company's volume so far today is 0.7 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. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The dividend yield is calculated by dividing a company's dividends per share by its stock price. NFG's dividend yield is 2.7%. 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: Investment Valuation Ratios: Dividend Yield
Consolidated Edison (NYSE:ED) has risen 1.4% and is currently trading at $60.30 per share. The company's volume for the day so far is 1.1 million 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 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ED has a high P/S ratio of 1.46. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.
Oneok (NYSE:OKE) has moved up 1.3% and is currently trading at $47.74 per share. The company's volume is currently 414,711 shares for the day, in keeping with the average volume over the past three months. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. The P/E ratio for OKE is 28.2, above the industry average of 15.44. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Investment Valuation Ratios: Price/Earnings Ratio
DTE Energy (NYSE:DTE) is currently trading at $60.48 per share, a 1.3% increase. So far today, 387,314 shares of the company's stock have changed hands. This is about the same trading activity as there was yesterday. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. DTE has a high D/E ratio of 113%. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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 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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.
by
Investopedia Staff
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