Filed Under: ,
Tickers in this Article: TPX, WPRT, WACLY, TSLA, WBC, BYI, DNKN
The Nasdaq has climbed 0.4%, the S&P 500 is up 0.3% and the Dow is unchanged after the morning's trading. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.

The biggest movers in the Consumer Cyclical sector (XLY) (+0.4%) are:
CompanyMarket CapPercentage Change
Tempur-Pedic International (NYSE:TPX)$1.59 billion+19.5%
Westport Innovations Inc (Nasdaq:WPRT)$1.45 billion+2.9%
Wacoal Holdings Corporation (Nasdaq:WACLY)$1.64 billion+2.3%
Tesla Motors (Nasdaq:TSLA)$2.9 billion+2.3%
WABCO Holdings (NYSE:WBC)$3.55 billion+1.9%
Bally Technologies (NYSE:BYI)$1.97 billion+1.6%
Dunkin\' Brands Group (Nasdaq:DNKN)$3.13 billion-1.5%
Investopedia Markets: Explore the best one-stop source for financial news

After a big jump of 19.5%, Tempur-Pedic International (NYSE:TPX) is trading at $31.99 per share. The company's volume for the day so far is 6.3 million shares, 4.5 times the current three-month average. 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. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. TPX has a PEG ratio of 0.8, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Increasing 2.9%, Westport Innovations Inc (Nasdaq:WPRT) is trading at $27.22 per share. So far today, 445,813 shares have changed hands. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. WPRT has a P/B ratio of 3.78 which shows that its share price is higher than its book value. 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. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Wacoal Holdings Corporation (Nasdaq:WACLY) is at $59.66 per share after an increase of 2.3%. So far today, 3,391 shares have changed hands, with trading activity in keeping with yesterday's. 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. 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 dividend yield is measured by taking the annual dividends per share and dividing that number by the stock price. WACLY has a dividend yield of 3%. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Investment Valuation Ratios: Dividend Yield

Tesla Motors (Nasdaq:TSLA) is currently trading at $28.16 per share, a 2.3% increase. This morning, the company's volume is 555,650 shares. This is 0.3 times the current daily average. 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. 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. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for TSLA is 21.43, 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.

WABCO Holdings (NYSE:WBC) has moved up 1.9% and is currently trading at $56.57 per share. At 101,593 shares, the company's volume so far today is 0.2 times its average over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. 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 easy-to-calculate debt ratio is helpful to investors looking for a quick take on the leverage for a company. WBC's debt ratio of 60.6% is fairly high. As such, the company is highly leveraged and not highly liquid. 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.

Bally Technologies (NYSE:BYI) is up 1.6% to reach a current price of $48.27 per share. So far today, the company's volume is 233,858 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 P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. BYI's P/E ratio of 20.5 is above the industry average of 14.21. 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. 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: Understanding The P/E Ratio

At $29.24, Dunkin' Brands Group (Nasdaq:DNKN) has slipped 1.5%. So far today, the company's volume is 245,623 shares, lighter than yesterday's volume of 2.2 million shares. If a stock price moves on high volume, this means that the change is a significant one. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a leverage ratio. DNKN's D/E ratio of 193% is on the high side. Companies with high D/E ratios may have difficulty attracting additional investment capital. 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.

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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

comments powered by Disqus

Trading Center