Brief Overview on EPS – SORL Auto Parts Inc (NASDAQ: SORL)

Stocks rose on Wednesday as retail shares jumped on the back of strong quarterly earnings from retailer Macy’s.

The Dow Jones industrial average closed 62.52 points higher at 24,768.93, with Nike as the best-performing stock in the index. The S&P 500 gained 0.41 percent to 2,722.46 as the consumer discretionary sector climbed 0.8 percent. The Nasdaq composite advanced 0.63 percent to 7,398.30. The small-cap Russell 2000 index, meanwhile, climbed 1 percent and posted a record close.

Macy’s shares rallied 10 percent on stronger-than-predictable quarterly earnings. The company’s same-store sales, a key metric for retailers, rose 4.2 percent last quarter as compared to an estimate of 1.4 percent.

The retailer’s surge boosted the broader retail sector. The SPDR S&P Retail ETF (XRT) jumped 1.62 percent on Macy’s move, its best day since April 10.

Macy’s CEO Jeff Gennette said Wednesday in a statement the company saw “continued healthy consumer spending,” noting it contributed to the company raising its fiscal full-year guidance for earnings and revenue.

The major averages rebounded from losses seen in the previous session. The S&P 500 and Nasdaq dropped 0.7 percent and 0.8 percent, respectively, on Tuesday, while the Dow snapped an eight-day winning streak.

Pressuring equities on Tuesday was a surge in interest rates. The benchmark 10-year note yield hit 3.095 percent on Tuesday, its highest level since 2011, while the two-year note yield traded around levels not seen in a decade.

The major indexes are up sharply this month, with the S&P 500 and Dow having gained more than 2 percent through Tuesday’s close. The Nasdaq, meanwhile, was up 4 percent in that period.

Elsewhere in corporate news, Teva Pharmaceutical rose nearly 3 percent after Warren Buffett’s Berkshire Hathaway revealed it raised its stake in the company. (Source: CNBC)

Stock to Watch: SORL Auto Parts Inc (SORL)

On Wednesday, Shares of SORL Auto Parts Inc (NASDAQ: SORL) -5.00% and ended its trading session at $5.32. The company saw 482,149 shares trade hands over the course of the day. Given that its average daily volume over the 30 days has been 245.74K shares a day, this signifies a pretty noteworthy change over the norm.

Technical Analysis:

The analysts, on average, are forecasting a $10.00 price target, but the individual stock is already up 43.78% from its recent lows. However, the stock is trading at -45.38% as compared to recent highs. Leading up to this report, we have seen a 22.00% return in the stock price over the last 30 days and a -6.04% return over the past 3 months. Since the starting of the calendar year, the stock’s performance is recorded at -16.67%.

The stock price recently practiced a 5-day change of 18.90% with 0.35 as average true range (ATR). SORL has a beta of 1.71 and RSI is 56.13. The stock declared an annual dividend of $N/A per share.

Role of Net Income in Calculating EPS:

Businesses use net income to calculate their earnings per share (EPS). Business analysts often refer to net income to as the bottom line, since it is listed at the bottom of the income statement. In the United Kingdom, NI is known as profit attributable to shareholders. To know the company’s net income – refer to this link: http://finviz.com. SORL Auto Parts Inc (NASDAQ: SORL) is a stock with 18.55M shares outstanding. As the earnings per share (EPS) formula is stated as earnings available to common shareholders divided by number of common stock shares outstanding, therefore its diluted EPS is calculated to be 1.26 (ttm). EPS is an indicator of company profit because the more earnings a company can generate per share, the more valuable each share is to shareholders.

A key aspect of EPS that’s often overlooked is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) – that company would be more efficient at using its capital to generate income and, all other things being equal would be a “better” company. Shareholders also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

Role of EPS in Calculating Price to Earnings Ratio (P/E):

Earnings per share are generally pondered to be the single most essential variable in determining a share’s price. It is also a key component used to calculate the price-to-earnings valuation (P/E) ratio.

Analysts also use the price-to-earnings (P/E) ratio for stock valuation, which is calculated as market price per share ($5.32) divided by EPS (1.26). Price to earnings ratio (P/E) for SORL stock is recorded at $4.44. The P/E ratio calculates how expensive a stock price is relative to the earnings produced per share. For example, if the P/E ratio of a stock is 20 times earnings, an analyst compares that P/E ratio to other companies in the same industry and to the ratio for the broader market.

Analysts’ Recommendation to Consider:

Analysts have a mean recommendation of 2.00 on this stock (A rating of less than 2 means buy, “hold” within the 3 range, “sell” within the 4 range, and “strong sell” within the 5 range).

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Chad Pitman

Chad Pitman

I am Chad Pitman and I focus on breaking news stories and ensuring we (“Stocks Market Cap”) offer timely reporting on some of the most recent stories released through market wires about “Emerging Stocks”. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for stocksmarketcap.com specializing in quicker moving active shares with a short term view on investment opportunities and trends.