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Utilities Stocks, Including Northeast Utilities, Making Big Moves on September 24, 2012
It's been a bad day for the market after the morning's trading. The Nasdaq has fallen 0.7%; the S&P 500 has decreased 0.2%; and the Dow is down 0.2%. 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 up 0.6% on a bad day for the market overall. The biggest movers in the sector are currently:
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Pinnacle (NYSE:PNW) has risen 1.8% and is currently trading at $53.52 per share. So far today, the company's volume is 205,656 shares, 0.3 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock is. 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 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. The P/B ratio for PNW is 1.55, indicating that the stock is trading for more 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
At $34.12, Atlas (NYSE:ATLS) has slipped 1.8%. The company's volume is currently 49,651 shares. This is on pace to reach yesterday's trading volume of 112,622 shares. The trading volume for a stock indicates the level of investor 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. The debt ratio is calculated by dividing total liabilities by total assets. ATLS' debt ratio of 84.7% 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.
After rising 1.7%, MGE Energy (Nasdaq:MGEE) is currently trading at a share price of $53.82. The company's volume for the day so far is 17,294 shares, 0.3 times the current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. MGEE's D/E ratio is 64%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Inergy (NYSE:NRGM) is down 1.6% to reach $22.35 per share. This morning, the company is trading a volume of 20,268 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. The P/S ratio for NRGM is 10.65, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Energy Transfer (NYSE:ETP) is up 1.4% to reach a current price of $43.41 per share. The company's volume is currently 786,911 shares for the day, 0.4 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for ETP is 9.3, below the industry average of 24.9. A low P/E ratio may indicate that the market expects relatively slower earnings growth. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Find P/E And PEG Ratios
Increasing 1.4%, South Jersey Industries (NYSE:SJI) is trading at $53.30 per share. So far today, the company's volume is 17,964 shares. At this rate, trading activity will likely be down from yesterday when 294,909 shares changed hands. 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. 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 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 SJI is 45.6%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Northeast Utilities (NYSE:NU) has moved up 1.4% and is currently trading at $37.94 per share. At 696,628 shares, the company's volume so far today is 0.4 times the average volume over the last three months. 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 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. NU has a dividend yield of 3.7%. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Due Diligence On Dividends
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
The Utilities sector (XLU) is up 0.6% on a bad day for the market overall. The biggest movers in the sector are currently:
| Company | Market Cap | Percentage Change |
| Pinnacle (NYSE:PNW) | $5.76 billion | +1.8% |
| Atlas (NYSE:ATLS) | $1.78 billion | -1.8% |
| MGE Energy (Nasdaq:MGEE) | $1.22 billion | +1.7% |
| Inergy (NYSE:NRGM) | $1.71 billion | -1.6% |
| Energy Transfer (NYSE:ETP) | $10.51 billion | +1.4% |
| South Jersey Industries (NYSE:SJI) | $1.62 billion | +1.4% |
| Northeast Utilities (NYSE:NU) | $11.75 billion | +1.4% |
Pinnacle (NYSE:PNW) has risen 1.8% and is currently trading at $53.52 per share. So far today, the company's volume is 205,656 shares, 0.3 times the average daily volume. Volume is used to evaluate how meaningful the price movement of a stock is. 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 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. The P/B ratio for PNW is 1.55, indicating that the stock is trading for more 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. 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: Investment Valuation Ratios: Price/Book Value Ratio
At $34.12, Atlas (NYSE:ATLS) has slipped 1.8%. The company's volume is currently 49,651 shares. This is on pace to reach yesterday's trading volume of 112,622 shares. The trading volume for a stock indicates the level of investor 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. The debt ratio is calculated by dividing total liabilities by total assets. ATLS' debt ratio of 84.7% 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.
After rising 1.7%, MGE Energy (Nasdaq:MGEE) is currently trading at a share price of $53.82. The company's volume for the day so far is 17,294 shares, 0.3 times the current three-month average. Volume is an important indicator because it indicates how significant a price shift is. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt-equity (D/E) ratio is a leverage ratio. MGEE's D/E ratio is 64%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
Inergy (NYSE:NRGM) is down 1.6% to reach $22.35 per share. This morning, the company is trading a volume of 20,268 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. 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. The P/S ratio for NRGM is 10.65, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. 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.
Energy Transfer (NYSE:ETP) is up 1.4% to reach a current price of $43.41 per share. The company's volume is currently 786,911 shares for the day, 0.4 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. The P/E ratio for ETP is 9.3, below the industry average of 24.9. A low P/E ratio may indicate that the market expects relatively slower earnings growth. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Find P/E And PEG Ratios
Increasing 1.4%, South Jersey Industries (NYSE:SJI) is trading at $53.30 per share. So far today, the company's volume is 17,964 shares. At this rate, trading activity will likely be down from yesterday when 294,909 shares changed hands. 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. 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 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 SJI is 45.6%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Northeast Utilities (NYSE:NU) has moved up 1.4% and is currently trading at $37.94 per share. At 696,628 shares, the company's volume so far today is 0.4 times the average volume over the last three months. 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 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. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. NU has a dividend yield of 3.7%. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Due Diligence On Dividends
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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.
by
Investopedia Staff
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