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Tickers in this Article: AWI, VMC, PNR, SHS, GDI, MLM, JHX
The market is doing well so far today. The Nasdaq has risen 0.2%; the S&P 500 has climbed 0.5%; and the Dow has moved up 0.5%. The capital goods sector is the category of stocks related to the manufacture or distribution of goods. The sector is diverse, containing companies that manufacture machinery used to create capital goods, electrical equipment, aerospace and defense, engineering and construction projects. It is also referred to as the "industrials sector". Performance in the capital goods sector is sensitive to fluctuations in the business cycle. Because it relies heavily on manufacturing, the sector does well when the economy is booming or expanding. As economic conditions worsen, the demand for capital goods drops off, usually lowering the prices of stocks in the sector.

Outperforming the market overall, the Capital Goods sector (XLI) is up 0.7% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Armstrong World Industries (NYSE:AWI)$2.78 billion+4.3%
Vulcan Materials (NYSE:VMC)$6.21 billion+3.3%
Pentair (NYSE:PNR)$4.42 billion+3.2%
Sauer-Danfoss (NYSE:SHS)$2.01 billion+3%
Gardner Denver (NYSE:GDI)$3 billion-2%
Martin Marietta Materials (NYSE:MLM)$3.9 billion+2%
James Hardie Industries SE (NYSE:JHX)$4.17 billion-1.9%
Forex Broker Summary: UFXMarkets

Armstrong World Industries (NYSE:AWI) is at $49.36 per share after an increase of 4.3%. The company's volume is currently 89,336 shares for the day, 0.3 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 price/book value ratio is calculated by dividing the current stock price by the company's book value per share. AWI's stock is trading for more than its book value with a P/B ratio of 4.17. 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. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Vulcan Materials (NYSE:VMC) has moved up 3.3% and is currently trading at $49.55 per share. So far today, 242,236 shares have changed hands. Volume is used to evaluate how meaningful the price movement of a stock 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/sales ratio measures a company's stock market price by its revenues. The P/S ratio for VMC is a high 1.97. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

After rising 3.2%, Pentair (NYSE:PNR) is currently trading at a share price of $45.95. At 2.6 million shares, the company's volume so far today is 0.6 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. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. PNR has a debt ratio of 56.4%. 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.

Sauer-Danfoss (NYSE:SHS) is up 3% to reach a current price of $42.66 per share. The company is trading at a volume of 16,189 shares. This is on pace to fall short of yesterday's volume of 50,427 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The debt-equity ratio of 36% is relatively low. 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.

At $59.95, Gardner Denver (NYSE:GDI) has slipped 2%. The company's volume for the day so far is 306,237 shares, 0.7 times its average over the past three months. 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. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. GDI's capitalization ratio is 24%, which is relatively low. Investors generally consider a company with low debt and high equity levels is a good quality investment. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Martin Marietta Materials (NYSE:MLM) has increased to a share price of $86.79, a 2% rise. So far today, the company's volume is 158,244 shares. The trading volume for a stock indicates the level of investor interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. MLM's dividend yield of 1.9% is fairly low. This could indicate that that the stock is overpriced or that future dividends might be higher. A higher dividend yield may indicate a risk of a fall in the price of the security, or a cut in the level of dividend payments, either of which would have the effect of dropping future returns. SEE: Investment Valuation Ratios: Dividend Yield

James Hardie Industries SE (NYSE:JHX) has fallen 1.9% and is currently trading at $46.77 per share. At 127,839 shares, the company's volume so far today is 21.6 times its current daily average. High volume indicates a lot of investor interest while low volume indicates the opposite. 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 is one of the more common methods of determining whether a stock is fairly valued. JHX's P/B ratio of 150.87 shows that its share price is higher than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio

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. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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