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Tickers in this Article: BYI, MGA, SFLY, HAR, TRLG, GWW, NTK
The market is currently down, with the Nasdaq slipping 0.2%, the S&P 500 decreasing 0.2% and the Dow down 0.2%. 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 Consumer Cyclical sector (XLY) is down 0.3%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Bally Technologies Inc. (NYSE:BYI)$1.84 billion+6.2%
Magna International Inc. (USA) (NYSE:MGA)$9.86 billion+4.9%
Shutterfly, Inc. (Nasdaq:SFLY)$1.15 billion-4.4%
Harman International Industries Inc./DE/ (NYSE:HAR)$2.97 billion+3.1%
True Religion Apparel, Inc. (Nasdaq:TRLG)$577.9 million-2.9%
WW Grainger (NYSE:GWW)$14.25 billion-2.2%
Nortek Inc (Nasdaq:NTK)$778.9 million+2%
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Increasing 6.2%, Bally Technologies (NYSE:BYI) is trading at $44.59 per share. The company's volume is currently 2.2 million shares. Yesterday, volume was only 1.4 million shares. 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. A company's value as an investment is more easily 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 price/book value ratio is calculated by dividing the current stock price by the company's book value per share. BYI has a P/B ratio of 8.21 which shows that its share price is higher 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. 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: Investment Valuation Ratios: Price/Book Value Ratio

After rising 4.9%, Magna International Inc (NYSE:MGA) is currently trading at a share price of $44.28. The company's volume is currently 985,777 shares for the day, 1.1 times the average daily volume. In technical analysis, trading volume is used to determine the strength of a market indicator. 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 calculated by dividing a company's dividends per share by its stock price. MGA's dividend yield is 2.6%. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Investment Valuation Ratios: Dividend Yield

After a decline of 4.4%, Shutterfly (Nasdaq:SFLY) has hit a share price of $30.66. So far today, the company's volume is 603,240 shares. A stock's volume conveys how excited investors are about it. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for SFLY is 2.08, 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.

Harman International Industries (NYSE:HAR) is up 3.1% to reach a current price of $43.84 per share. With 736,318 shares changing hands so far today, the company's volume is 1.7 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. 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. The debt ratio is calculated by dividing total liabilities by total assets. HAR's debt ratio of 49.6% is on the low side. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

True Religion Apparel (Nasdaq:TRLG) has decreased to $21.77 per share, a 2.9% fall. The company is trading at a volume of 124,860 shares. This is on pace to reach yesterday's trading volume of 271,038 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. The P/E ratio for TRLG is 12.0, below the industry average of 19.91. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. 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: Investment Valuation Ratios: Price/Earnings Ratio

Currently trading at $200.06 per share, Grainger (NYSE:GWW) has fallen 2.2%. So far today, the company's volume is 352,156 shares, 0.9 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. 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. GWW has a low capitalization ratio of 14.1%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Nortek (Nasdaq:NTK) has moved up 2% and is currently trading at $52.52 per share. So far today, 1,737 shares have changed hands. High volume indicates a lot of investor interest while low volume indicates the opposite. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. 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. The D/E ratio for NTK is 1369%. 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 is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

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.

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