It has been my experience that ratio analysis can play an important role in better understanding how a company is performing vs its peers.A company's financial ratios can show a poorly performing company yet if its peers are performing poorly then maybe it is not performing as bad as it seems.We are seeing this in many areas but one could be the homebuilders.

Rates are rising and home purchases are down.Homebuilders have suffered lately.However, all homebuilders have been hurt by rising rates and all of their ratios have declined since 2021.

If you noticed a decline in all of the companies in a certain sector, how might this change your opinions of the sector and / or the company you are researching?