D.R. Horton, Inc. and Other Capital Goods Stocks Making Big Moves
July 27, 2012| Filed Under » Sector Summary, Stock Analysis
Tickers in this Article » ACO, GDI, SPF, GGG, SLCA, BEAV, DHI
The market is on the rise this morning. The Nasdaq has risen 1.4%; the S&P 500 has increased 1.1%; and the Dow has moved up 0.8%. 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.
Underperforming the market overall, the Capital Goods sector (XLI) is up 1.3%, and these are its current biggest movers:
Company Market Cap Percentage Change
AMCOL International Corporation (NYSE:ACO) $917.5 million +9.3%
Gardner Denver, Inc. (NYSE:GDI) $2.61 billion +7.5%
Standard Pacific Corp. (NYSE:SPF) $1.26 billion -4.7%
Graco Inc. (NYSE:GGG) $2.6 billion +4.2%
US Silica Holdings Inc (NYSE:SLCA) $502.9 million -3.3%
BE Aerospace, Inc. (Nasdaq:BEAV) $4.07 billion -3.1%
D.R. Horton, Inc. (NYSE:DHI) $5.99 billion -3%
Beginner's Guide To NinjaTrader Trading Software
AMCOL (NYSE:ACO) has increased to a share price of $31.44, a 9.3% rise. This morning, the company's volume is 49,241 shares. This is 0.6 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 company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. ACO has a capitalization ratio of 37.5%. The capitalization ratio is one of the more meaningful debt ratios because it focuses on the relationship of debt liabilities as a component of a company's total capital base, which is the capital raised by shareholders and lenders.
After rising 7.5%, Gardner Denver (NYSE:GDI) is currently trading at a share price of $56.06. The company's volume for the day so far is 669,906 shares, consistent with its average over the last three months. 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 price/earnings ratio is calculated by taking a stock price and dividing it by the earnings-per-share (EPS). GDI's P/E ratio of 9.7 falls below the industry average of 29.65. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: The P/E Ratio: A Good Market-Timing Indicator
Standard (NYSE:SPF) is currently trading at a share price of $6.03, a 4.7% decline. So far today, 2.5 million shares have changed hands. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The price/book value ratio, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. SPF's P/B ratio of 1.88 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. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio
Increasing 4.2%, Graco (NYSE:GGG) is trading at $44.81 per share. So far today, 124,265 shares have changed hands, which is likely to result in less activity than yesterday's volume of 485,307 shares. If a stock price moves on high volume, this means that the change is a significant one. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. For investors primarily interested in the income a stock can generate, the dividend yield is an important determinant of how attractive a stock is. Dividend yield for GGG is 2.1%. It is important to remember that while a higher dividend yield is more attractive, all else being equal, a higher dividend yield can also indicate greater perceived risk. SEE: Investment Valuation Ratios: Dividend Yield
Currently trading at $9.19 per share, US Silica Holdings (NYSE:SLCA) has fallen 3.3%. The company's volume for the day so far is 364,098 shares. This is 1.4 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. 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. SLCA's P/S ratio of 3.32 is on the high side. This could be a good sign if the share price increases. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.
BE Aerospace (Nasdaq:BEAV) is trading at $37.99 per share, down 3.1%. At 568,498 shares, the company's volume so far today is 0.3 times the average volume over the last 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 measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for BEAV is 56.2%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.
D.R. Horton, Inc (NYSE:DHI) has fallen 3% and is currently trading at $18.23 per share. So far today, the company's volume is 6.1 million shares. 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. 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 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. DHI's D/E ratio is 65%. 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.
Read more: http://www.investopedia.com/stock-analysis/SectorSummary/DRHortonIncandOtherCapitalGoodsStocksMakingBigMoves.aspx?partner=YahooSA#ixzz21rimaJ00