So far today, the Nasdaq is up 0.3%, the S&P 500 has risen 0.1% and the Dow has declined 0.1%.
The biggest movers in the Real Estate Operations sector (IYR) (+0.2%) are:
|Company||Market Cap||Percentage Change|
|PennyMac Mortgage (NYSE:PMT)||$904 million||-3.9%|
|Zillow (Nasdaq:Z)||$1.05 billion||+1.8%|
|St. Joe (NYSE:JOE)||$1.76 billion||-1.5%|
|Howard (NYSE:HHC)||$2.53 billion||-1.3%|
|Alexandria Real Estate Equities (NYSE:ARE)||$4.66 billion||-1.3%|
|Ventas (NYSE:VTR)||$18.99 billion||-1%|
|Health Care REIT (NYSE:HCN)||$13.75 billion||-1%|
Broker Summary: TD Ameritrade Thinkorswim
After a decline of 3.9%, PennyMac Mortgage (NYSE:PMT) has hit a share price of $20.96. The company's volume for the day so far is 6.7 million shares. 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. 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. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for PMT is 7.7, above the industry average of 4.64. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings
Zillow (Nasdaq:Z) has risen 1.8% to hit a current price of $36.50 per share. At 445,348 shares, the company's volume so far today is consistent with the volume from yesterday. 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. Z's debt ratio of 16.5% is on the low side. A low debt ratio means the company has more available cash flow. 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.
St. Joe (NYSE:JOE) is down 1.5% to reach $18.75 per share. This morning, the company's volume is 86,103 shares. This is 0.2 times its current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/sales ratio measures a company's stock market price by its revenues. JOE's P/S ratio of 13.63 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. 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.
Howard (NYSE:HHC) has decreased to $65.71 per share, a 1.3% fall. The company's volume is currently 15,633 shares for the day, 0.2 times its current three-month average. A stock's volume conveys how excited investors are about it. 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 is a leverage ratio. HHC's debt-equity ratio of 29% is on the low end. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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.
Slipping 1.3%, Alexandria Real Estate Equities (NYSE:ARE) is currently trading at $73.25 per share. This morning, the company is trading a volume of 66,068 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. 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 calculated by dividing the current stock price by the company's book value per share. ARE's stock is trading for more than its book value with a P/B ratio of 1.52. This may be a sign that the company is overvalued. 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 $63.63, Ventas (NYSE:VTR) has slipped 1%. The company's volume is currently 567,846 shares for the day, with trading activity in keeping with yesterday's. The trading volume for a stock indicates the level of investor interest. 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. 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. VTR has a capitalization ratio of 43.3%. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.
Health Care REIT (NYSE:HCN) is trading at $59.59 per share, down 1%. So far this morning, 642,329 shares have changed hands. This is 0.2 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. Compared to the industry average of 13.98, HCN's P/E ratio of 54.2 is quite high. 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. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Understanding The P/E Ratio
The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. 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.