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Utilities Stocks, Including CPFL Energia S.A, Making Big Moves on September 11, 2012
The market is doing well so far today. The Nasdaq is up 0.3%; the S&P 500 has risen 0.6%; and the Dow has climbed 0.7%. 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 biggest movers in an essentially flat Utilities (XLU) sector are:
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Huaneng Power International, Inc (NYSE:HNP) has risen 2.7% to hit a current price of $29.08 per share. At 23,530 shares, the company's volume so far today is 0.3 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. HNP's stock is trading for more than its book value with a P/B ratio of 1.25. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: How Buybacks Warps The Price-To-Book Ratio
El Paso Pipeline Partners (NYSE:EPB) has fallen 2.6% and is currently trading at $34.57 per share. The company's volume is currently 5.6 million shares. This is greater than yesterday's volume of 267,653 shares. 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. Dividend yield measures the income that a stock will generate for an investor. EPB has a dividend yield of 6.2%. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Due Diligence On Dividends
Companhia de Saneamento Basico (NYSE:SBS) has fallen 2.1% and is currently trading at $84.20 per share. With 211,238 shares changing hands so far today, the company's volume is 0.7 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. SBS' P/S ratio of 1.29 is on the high side. 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.
Niska Gas Storage (NYSE:NKA) is currently trading at a share price of $13.08, a 2% decline. The company is currently trading a volume of 25,442 shares. 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. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. NKA has a debt ratio of 62%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.
CPFL Energia S.A (NYSE:CPL) is currently trading at $22.76 per share, a 1.7% increase. At 395,301 shares, the company's volume so far today is consistent with its current daily average. 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. CPL's D/E ratio of 220% is on the high side. 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.
Currently trading at $22.65 per share, Crestwood Midstream (NYSE:CMLP) has fallen 1.5%. So far today, the company's volume is 56,566 shares. This is on pace to fall short of yesterday's volume of 287,773 shares. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. CMLP's PEG ratio is 2.74. 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.
After rising 1.4%, Inergy (NYSE:NRGM) is currently trading at a share price of $23.92. So far today, the company's volume is 2,089 shares, 0.1 times its average over the past three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. NRGM has a P/E ratio of 60.5, high compared to the industry average of 24.41. 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 P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
The biggest movers in an essentially flat Utilities (XLU) sector are:
| Company | Market Cap | Percentage Change |
| Huaneng Power International, Inc (NYSE:HNP) | $9.95 billion | +2.7% |
| El Paso Pipeline Partners (NYSE:EPB) | $7.37 billion | -2.6% |
| Companhia de Saneamento Basico (NYSE:SBS) | $9.79 billion | -2.1% |
| Niska Gas Storage (NYSE:NKA) | $911.8 million | -2% |
| CPFL Energia S.A (NYSE:CPL) | $10.77 billion | +1.7% |
| Crestwood Midstream (NYSE:CMLP) | $1.1 billion | -1.5% |
| Inergy (NYSE:NRGM) | $1.77 billion | +1.4% |
Huaneng Power International, Inc (NYSE:HNP) has risen 2.7% to hit a current price of $29.08 per share. At 23,530 shares, the company's volume so far today is 0.3 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. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. HNP's stock is trading for more than its book value with a P/B ratio of 1.25. This may be a sign that the company is overvalued. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: How Buybacks Warps The Price-To-Book Ratio
El Paso Pipeline Partners (NYSE:EPB) has fallen 2.6% and is currently trading at $34.57 per share. The company's volume is currently 5.6 million shares. This is greater than yesterday's volume of 267,653 shares. 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. Dividend yield measures the income that a stock will generate for an investor. EPB has a dividend yield of 6.2%. To calculate the dividend yield, divide the level of dividends by the stock price; the higher the yield, the more attractive the security. SEE: Due Diligence On Dividends
Companhia de Saneamento Basico (NYSE:SBS) has fallen 2.1% and is currently trading at $84.20 per share. With 211,238 shares changing hands so far today, the company's volume is 0.7 times its current three-month average. High volume indicates a lot of investor interest while low volume indicates the opposite. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. SBS' P/S ratio of 1.29 is on the high side. 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.
CPFL Energia S.A (NYSE:CPL) is currently trading at $22.76 per share, a 1.7% increase. At 395,301 shares, the company's volume so far today is consistent with its current daily average. 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. CPL's D/E ratio of 220% is on the high side. 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.
Currently trading at $22.65 per share, Crestwood Midstream (NYSE:CMLP) has fallen 1.5%. So far today, the company's volume is 56,566 shares. This is on pace to fall short of yesterday's volume of 287,773 shares. A stock's volume conveys how excited investors are about it. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. CMLP's PEG ratio is 2.74. 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.
After rising 1.4%, Inergy (NYSE:NRGM) is currently trading at a share price of $23.92. So far today, the company's volume is 2,089 shares, 0.1 times its average over the past three months. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. NRGM has a P/E ratio of 60.5, high compared to the industry average of 24.41. 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 P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?
The Bottom Line The nature of the market is such that stocks will have good days and bad days. 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.
by
Investopedia Staff
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