This morning's trading has marked a bad day for the market so far. The Nasdaq has declined 0.2%; the S&P 500 is trading down 0.3%; and the Dow has fallen 0.4%.The Gold and Silver sector (SLV) is currently lagging behind the overall market, down 0.8%, and its current biggest movers are:
|Company||Market Cap||Percentage Change|
|Seabridge Gold, Inc. (U SA) (NYSE: SA)||$701.3 million||-3.8%|
|Agnico-Eagle Mines Limited (U SA) (NYSE: AEM)||$6.88 billion||-2.3%|
|Silver Wheaton Corp. (U SA) (NYSE: SLW)||$9.72 billion||-2%|
|Pan American Silver Corp. (U SA) (Nasdaq: PAAS)||$2.83 billion||-1.9%|
|Compania de Minas Buenaventura SA (ADR) (NYSE: BVN)||$10.37 billion||-1.9%|
|Goldcorp Inc. (U SA) (NYSE: GG)||$31.72 billion||-1.8%|
|Newmont Mining (NYSE: NEM)||$24.67 billion||-1.7%|
Software Summary: Finviz.com Stock Screener
Seabridge Gold, Inc (NYSE: SA) has fallen 3.8% and is currently trading at $15.52 per share. The company's volume is currently 121,592 shares for the day, 0.3 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.
Valuation ratios allow the investor to make a quick determination as to a company's investment value. 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. SA's P/B ratio of 3.1 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. 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
Currently trading at $39.25 per share, Agnico-Eagle Mines Limited (NYSE: AEM) has fallen 2.3%. The company is currently trading a volume of 1.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator.
Profit-margin ratios measure how much money a company squeezes from its total revenue or total sales. Investors can look at a company's gross profit margin, operating profit margin and net margin to understand a company's profitability. AEM has a gross profit margin of 48.2%. Operating margin is determined by taking operating income (income minus variable expenses) and dividing it by sales. AEM has an operating profit margin of 29%, which is low relative to its gross profit margin. Net profit margin is a good ratio for determining how a company is performing. Net profit margin is -28.4%. This shows that the company reported a net loss in the most recent quarter.
Understanding investment valuation ratios allows the investor to assess the true value of an individual stock. Dividend yield measures the income that a stock will generate for an investor. AEM's dividend yield of 2% is fairly low. If you are an income investor, this stock may not be attractive to you. 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: Dividend Yield For The Downturn
Silver Wheaton Corp (NYSE: SLW) has decreased to $26.93 per share, a 2% fall. This morning, 1.6 million shares have been traded, below yesterday's volume of 4.4 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.
Margin ratios highlight companies that are worth further examination. SLW has a relatively high gross profit margin of 88.2%. A high gross profit margin generally means that the company can make a reasonable profit on sales, provided that overhead costs do not increase. Operating margin for SLW is 75.4% and net margin is 74.5%, both low relative to its gross margin.
When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. SLW's P/S ratio of 15.23 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.
After a decline of 1.9%, Pan American Silver Corp (Nasdaq: PAAS) has hit a share price of $18.04. So far today, 771,020 shares have changed hands. This is 0.4 times the average volume over the last three months. Volume is an important indicator because it indicates how significant a price shift is.
There are many tools investors can use to evaluate a stock, including margins. Margins, quite simply, are earnings expressed as a ratio, or a percentage of sales, and this allows investors to compare the profitability of different companies, while net earnings, which are presented as an absolute number, cannot. PAAS' gross profit margin is 58.4%. Relative to its gross profit margin, PAAS' operating profit margin of 34.5% and net profit margin of 34.7% are low.
Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. PAAS has a PEG ratio of 1.57, which is consistent with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.
Slipping 1.9%, Compania de Minas Buenaventura SA (NYSE: BVN) is currently trading at $40 per share. At 251,326 shares, the company's volume so far today is 0.2 times its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is.
Profit-margin ratios help us to keep score, as measured over time, of management's ability to generate profits and manage costs and expenses. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. The gross profit margin for BVN is 62.3%. A high net profit margin indicates a highly profitable company, and a low profit margin indicates the opposite. The company has a net profit margin of 54.4%, which is low relative to its gross profit margin. A low profit margin may indicate a pricing strategy. The operating margin ratio can vary widely across industries, so investors should focus on comparing companies from similar industries or with similar business models. Operating profit margin for BVN is 34.9%.
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. The debt-equity ratio of 4% is relatively low. 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. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.
Falling 1.8%, Goldcorp Inc (NYSE: GG) is currently at a share price of $38.46. So far today, 1.8 million shares have changed hands. Volume is used to evaluate how meaningful the price movement of a stock is.
Margin analysis tells us how effectively management can wring profits from sales and how much room a company has to withstand a downturn, fend off competition and make mistakes. GG has a gross profit margin of 61.3%. The operating profit margin indicates how much EBIT is generated per dollar of sales. The operating margin for GG is 38.5%, which is low compared its gross profit margin. Tracking net profit margin over time for a single company can be a valuable tool for seeing how a business is developing. The company has a net profit margin of 31.1%.
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 debt ratio is calculated by dividing total liabilities by total assets. The debt ratio for GG is a low 27.1%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. 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.
Newmont Mining (NYSE: NEM) has fallen 1.7% and is currently trading at $49.41 per share. So far today, 2.2 million shares have changed hands, while it was 4.7 million shares yesterday. A stock's volume conveys how excited investors are about it.
Calculating the profit margin is a great way to gain insight into aspects of how well a company generates and retains money. Instead of measuring how much managers earn from assets, equity or invested capital, profit-margin ratios measure how far a company stretches its total revenue or total sales. NEM's gross profit margin is 58.9%. Investors trying to assess a company's ability to continue to pay its fixed expenses even if its business declines may want to evaluate the operating margin ratio. Relative to its gross profit margin, NEM's operating margin of 39.3% is on the low side. While ratios such as price/earnings (P/E) or price/book value look at the relative attractiveness of a stock, the net profit margin ratio focuses on company performance rather that stock market valuation. With a net profit margin of 8.6%, the company has a high one compared to its gross profit margin. Companies with profit margins reflecting a competitive advantage are able to improve their market share during the hard times - leaving them even better positioned when things improve again.
Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. NEM has a P/E ratio of 75.0. 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: Can Investors Trust the P/E Ratio?
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. 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.