The Nasdaq is trading up 0.2%, the S&P 500 has remained steady and the Dow remains relatively unchanged so far today. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
The Healthcare sector (XLV) has climbed 0.3% overall, and these are the biggest movers in the sector so far:
|Company||Market Cap||Percentage Change|
|The Cooper Companies, Inc. (NYSE:COO)||$3.76 billion||+3.6%|
|VIVUS, Inc. (Nasdaq:VVUS)||$2.33 billion||-2.6%|
|Impax Laboratories Inc (Nasdaq:IPXL)||$1.65 billion||-2.3%|
|Pharmacyclics, Inc. (Nasdaq:PCYC)||$4.08 billion||+2.3%|
|WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX)||$1.05 billion||-1.9%|
|Varian Medical Systems (NYSE:VAR)||$6.33 billion||+1.8%|
|Valeant Pharmaceuticals Int (USA) (NYSE:VRX)||$15.13 billion||-1.5%|
Forex Broker Summary: Forex Capital Markets (FXCM)
Cooper Companies (NYSE:COO) has risen 3.6% to hit a current price of $80.95 per share. At 247,621 shares, the company's volume so far today is consistent with its average over the last three months. Volume indicates the level of interest that investors have in a company at its current price. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. 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. COO has a debt-equity ratio of 16%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.
VIVUS (Nasdaq:VVUS) has decreased to $22.64 per share, a 2.6% fall. So far today, the company's volume is 1.2 million shares. At this rate, trading activity will likely be down from yesterday when 4.7 million shares changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. VVUS' debt ratio of 4.6% is on the low side. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. 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.
Slipping 2.3%, Impax Laboratories (Nasdaq:IPXL) is currently trading at $23.92 per share. The company's volume is currently 257,553 shares for the day, consistent with its current daily average. Volume is an important indicator because it indicates how significant a price shift is. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. IPXL's PEG ratio is 1.29. 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.
Pharmacyclics (Nasdaq:PCYC) has moved up 2.3% and is currently trading at $60.51 per share. This morning, the company is trading a volume of 422,679 shares. The trading volume for a stock indicates the level of investor interest. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. 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. PCYC's stock is trading for more than its book value with a P/B ratio of 28.81. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: How Buybacks Warps The Price-To-Book Ratio
At $14.50, WuXi PharmaTech (Cayman) Inc (NYSE:WX) has slipped 1.9%. The company's volume for the day so far is 42,893 shares, 0.2 times its 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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 WX is 2.4, which is relatively high. This could be a good sign if the share price increases. 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.
Varian (NYSE:VAR) has risen 1.8% and is currently trading at $58.22 per share. So far today, 253,086 shares of the company's stock have changed hands. This is on pace to reach yesterday's trading volume of 491,914 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. Perhaps one of the most widely-used stock analysis tools is the price-to-earnings ratio, or P/E. Relative to the industry P/E ratio of 47.88, VAR's 15.9 is low. A low P/E ratio may indicate that the market expects relatively slower earnings growth. 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: Profit With The Power Of Price-To-Earnings
After a decline of 1.5%, Valeant Pharmaceuticals Int (NYSE:VRX) has hit a share price of $50.01. So far today, the company's volume is 301,505 shares, 0.1 times the average daily volume. 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 debt-equity (D/E) ratio is a leverage ratio. VRX has a high D/E ratio of 204%. Generally, a high D/E ratio means that the company may have difficulty generating enough cash to pay off its debts. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. 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.
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