|
| |
|
Pick-of-the-Month
Stock
(December
2005) |
| Stock Name |
SYM |
Exch. |
Sector |
Industry |
Date Picked |
Pick Price
(per share) |
|
Cemex, S.A. de C.V. |
CX |
NYSE |
Capital Goods |
Construction - Raw Materials |
12/12/05 |
$58.75 |
Cemex, S.A. de C.V. is a leading global producer and
marketer of quality cement and
ready-mix concrete products. The company has operations in North, Central, and South America;
Europe; the Caribbean; Asia; and Africa.
CEMEX is a large-cap value company in the
Capital Goods sector. The
Company has a market capitalization of $22,739.91M with outstanding shares of
383.80M. The Company's corporate addresses
are: 590 Madison Avenue, 41st Floor; New York, NY 10019
(U.S.); and Av. Constitucion 444 Pte., Apdo. Postal 392, Monterrey, Nuevo Leon
MX C.P. 64000 (Mexico). The company was founded in 1906 and has 53,242 employees.
Sector: Capital Goods; Industry: Construction ~ Raw
Materials; Ticker:
CX; Exch:
NYSE;
12/12/05 Price: $58.75.
STOCK GRADE (ASG: 53.85)
BUSINESS & FINANCIAL SUMMARY
(Yahoo)
EXPANDED BUSINESS DESCRIPTION
(Reuters)
STOCK INFO/RESEARCH
(MSN)
OWNERSHIP
(MSN)
KEY DEVELOPMENTS &
RECENT NEWS
(MSN)
COMPANY'S WEB SITE
STOCK'S CORE
STRENGTHS (SEE: Table Below)
| Management's Effectiveness (12 Mo.) |
. . . |
Return on Equity: |
31.36% |
| Profitability (12 Mo.) |
. . . |
Profit Margin: |
16.66% |
| Stock's Growth Record (12 Mo.) |
. . . |
Revenue: |
6.91% |
|
. . . |
EPS: |
77.55% |
|
. . . |
Price: |
75.56% |
|
. . . |
Dividend: |
NA |
| PE & EPS (12 Mo.) |
. . . |
Price/Earnings: |
7.74 |
|
. . . |
Earnings/Share: |
7.66 |
| Price
/ Share |
. . . |
As of 12/12/2005: |
$58.75 |
CEMEX SA de C.V. (CEMEX) - EVALUATION
CEMEX's
stock emerged as an ACE'S selection based on the evaluation results of the
criteria listed below. The evaluation results are encapsulated as one value in
ASG (short for ACE'S Stock Grade). ASG
is proprietary variable that was devised by ACE'S to measure the
quality of a stock for investment. CEMEX's ASG value of 53.85 is
EXCELLENT.
A. MANAGEMENTS EFFECTIVENESS - EXCELLENT
B. PRODUCTS & SERVICES, SET OF - EXCELLENT
C. SALES -
EXCELLENT
D. CASH FLOW, FREE -
GOOD
E. PROFITABILITY - EXCELLENT
F. PRICE-EARNINGS RATIO (P/E) - EXCELLENT (LOWER THAN
INDUSTRY'S AVERAGE)
G.
FINANCIAL HEALTH -
EXCELLENT.
H.
MARKET CAPITALIZATION -
AVERAGE
I.
TRADED VOLUME -
EXCELLENT
J.
PRICE GROWTH - EXCELLENT
A. MANAGEMENTS EFFECTIVENESS - EXCELLENT
How well a company performs
generally - in its
business operations, controlling costs, the success of its products and
services in the market place, profitability, and the like - depends on its
management's efficiency. Return on Equity ( ROE) is used as a general indication
of the company's efficiency.
CEMEX's ROE (ttm) of 21.6% is higher (by about 18% and 41%
correspondingly) than the Industry's ROE of 18.3% and the S&P 500's ROE of 15.3%. (Ref.:
MSN Finance\Key Ratios).
 ACE'S gives a preferential rating to a company that has a
comparable or relatively higher ROE than the Industry. ACE'S rating of
CEMEX's Management's Effectiveness: EXCELLENT.
B. PRODUCTS & SERVICES, SET OF - EXCELLENT
Products and services are the elements that enables a company to have a presence
in its target market and generate sales. The set of products and services that a company has and how successful those products and services performs in the
target market are very important factors in considering a company's stock for
investment.
CEMEX's line-up of Products & Services.
Cement, ready-mix concrete, aggregates, clinker and complimentary building
materials. (Ref.:Cemex).
CEMENT
Cement is the most-used construction material in the world. When cement is mixed
with water and aggregates (sand and gravel), the resulting chemical reaction
transforms the powder into solid rock that builders can shape and mold.
People and institutions worldwide use cement to build architectural, artistic,
religious, and cultural structures. Government and commercial buildings, houses
of worship, museums, and urban centers are all predominantly built with cement.
Construction projects, from residential, commercial, and industrial structures
to massive public works construction are the major users of cement. In the U.S.,
it is estimated that cement has penetrated just over a quarter of its potential
share in market sectors such as paving, water management, and residential
construction. This implies a potential annual demand of more than 160
million metric tons of cement in that market alone.
(Ref.:Cemex).
READY-MIX CONCRETE
Ready-mix concrete is the mixture of cement, sand, gravel, and water that
is delivered to a customer's construction site in a state that is ready for
immediate usage. CEMEX is among the largest ready-mix producers in the world.
Ready-mix is customized for the specific requirements of their users and
projects. For example, CEMEX fluid fill greatly simplifies the process of laying
pipe and cable by surrounding the pipe in a tightly packed shell that provides
protection from the elements, prevents settling, and enables crews to work
quickly. CEMEX also markets an anti-bacterial concrete that is designed to
safeguard groundwater supplies.
Effective ready-mix provision is a sophisticated mix of logistics, distribution,
and delivery. The ready-mix trucks are specially equipped to ensure product
quality and uniformity. By changing the proportion of water, sand, and cement in
the mix, the concrete's resistance, manageability, and finish can be modified .
Additives may also be included in the mix to customize the concrete consistent
with the transportation time from the cement plant to the project, weather
conditions at the construction site, and individual project specifications.
(Ref.:Cemex).
AGGREGATES
Aggregates are the sand and gravel that are used, with cement, as components in
making concrete. (Ref.:Cemex).
COMPLIMENTARY BUILDING MATERIALS
CEMEX offers to its distributors and customers a complementary range of popular
building materials, including rebar, paint, wire, rod, and lime.
(Ref.:Cemex).
ACE'S
gives a preferential rating to a company who have
more than one product
and services that have present and continued utility in a broad and
dynamic market.
An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments.
However, there is one objective data that indicates how well the subjective
elements of CEMEX's products and services
are assessed and used by its target market - the company's
sales.
ACE'S rating of
CEMEX's line-up of Products & Services: EXCELLENT
C. SALES - EXCELLENT
Sales is an important indicator on how a company's products and services
performs in its target market. Generally, a high sales figure is preferred than a lower figure.
Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a
company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.
CEMEX's annual sales was $5,624M in 12/2000, $6,933M in 12/2001, $6,538M in 12/2002,
$7,173M in 12/2003 and $8,148M in 12/2004. (Ref.:
MSN Money\Financials).
CEMEX's ttm annual sales of $11,271M was 126% more than the Industry's
sales of $4,980M.
CEMEX's ttm Sales growth rate of 18.10% was 55.8% points lower than the
Industry's rate of 73.90%.
(Ref.:
MSN Money\Research).
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a high and progressively increasing level of sales from year-to-year. ACE'S rating of
CEMEX's Sales Growth Rate: EXCELLENT.
D. CASH FLOW, FREE - GOOD
Cash flow is crucial to the operation and survival of companies. A company
having ample ready cash ensures that creditors, employees, and others can be
paid on time.
Cash flow could be considered as a better measure of a business's profitability
than earnings, because a company can show positive net earnings and have insufficient cash flow (that is, the company
is not able to pay its debts). Cash Flow
thus can be used as an indicator of a company's financial strength.
CEMEX's cash flow during the past 5 years: -$1500.5M in 12/2000;
$1,345.5M in 12/2001; $648.7M in 12/2002; $739.1M in 12/2003; and $1,390.0M in
12/2004.
(Ref.:
MSN Money\Financials).
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a positive and appreciable cash flow from year-to-year. ACE'S rating of
CEMEX's Cash Flow: GOOD.
E. PROFITABILITY -
EXCELLENT
Making a profit is the ultimate goal of every company. A useful gauge of a
company's profitability is its net income (also referred to as "earnings"). Related to a company's outstanding shares of common stocks, the company's total earnings is transformed
to "earnings per share" (or "EPS" for short). EPS is a very popular indicator of a company's profitability and a
powerful variable that influences the price of a company's stock.
CEMEX's annual Net Income, for the past 12 months, of $1,913.4M is more
than 4 times the
Industry's Income of $463.9M). For the past 5 years, CEMEX's annual Net Income are: $999.8M
in 12/2000; $1,179.4M in 12/2001; $519.9M in 12/2002; $629.5M in 12/2003; and $1,307.0M in
12/2004. In terms of growth, CEMEX's Net Income have grown 26.10%
during the past 12 months (vs. the Industry's 76.2% growth rate).
(Refs.
MSN Money\Financials\Statements;
MSN Money\Wizard)
In terms of EPS, the Company Earnings/Share for the past 5 years are: $0.38 in
12/2000; $4.14 in 12/2001; $1.73 in 12/2002; $1.99 in 12/2003; and $3.93 in 07/2004. (Refs.
MSN Money\Financials\Statements)
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a positive, appreciable and increasing net income.. ACE'S rating of
CEMEXs Profitability: EXCELLENT.
F. PRICE-EARNINGS RATIO (P/E) - EXCELLENT (LOWER THAN
INDUSTRY'S AVERAGE)
A stock's Price-Earnings ratio tells us roughly how much investors are willing
to pay per dollar of earnings. Price-Earnings
is a ratio of a company's current share price compared to its per-share
earnings. The P/E ratio is a much better indicator
of the value of a stock than the market price alone.
In general, a high P/E means high projected earnings in the future. As such, the
P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To
determine whether a particular P/E is high
or low, take into account a company's growth rates; and the P/Es of other
companies in the same industry. Historically,
the average P/E ratio in the market has been around 15-25.
CEMEX has a P/E ratio of 8.13 (ttm) which is 53% lower
than the
Industry's P/E of 17.41 (ttm)
(Ref.: Yahoo! Finance\Competitors)
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower P/E than the Industry. ACE'S rating of
CEMEX's P/E Ratio: EXCELENT (LOWER THAN INDUSTRY'S AVERAGE)
G. FINANCIAL HEALTH -
EXCELLENT
The assumption of debt, i.e., financial leverage, are used by companies to
finance its assets. The magnitude of the debt's expense component affects the company's net income.
A company with significantly more debt than equity is considered to be highly
leveraged. A popular measure of financial
leverage is the "debt/equity ratio". A higher debt/equity
ratio generally means that a company has been aggressive in financing its growth
with debt. This higher ratio can result
in volatile or negative earnings as a result of the additional interest expense.
Thus, the Debt/Equity Ratio is popularly used
as a measure of a company's financial health.
CEMEX's has a 0.00 Debt/Equity Ratio (latest 12 months). Compared with the Industry's
0.29 and the S&P 500's 1.06, CEMEX has an excellent debt ratio.
(Refs.:
MSN Money\Ratios)
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower debt ratio than the Industry. ACE'S rating of
CEMEX's
Debt Ratio: EXCELLENT.
H. MARKET CAPITALIZATION - AVERAGE
Market Capitalization (or market cap for short) is a measure of a company's
size. The market cap provides a broad gauge
of the growth-versus-risk potential of a company. Historically, large caps have
experienced slower growth with lower
risk; whereas small caps have experienced higher growth potential, but with
higher risk.
The market cap of a company is calculated by multiplying the number of its
outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large
Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap.
CEMEX is a large cap value company with a market
capitalization of $22,739.91M with outstanding shares of 383.80M. (Ref.:
Reuters)
ACE'S gives a preferential rating to small and mid cap companies. ACE'S rating of
CEMEX's
Market Cap: AVERAGE.
I. TRADED VOLUME -
EXCELLENT
A stock's price goes up or down based on the laws of supply and demand. Simply
stated, when a stock's price goes up, there must be significant buying demand
for the stock. Volume is the actual number of shares traded daily. Traded volume
could be used as a gauge of the demand for a stock.
CEMEX has an 3-month Average Daily Volume of 1,643,360 shares; and
a 10-day Average Daily Volume of 1,073,510 shares.
(Refs.:
Yahoo! Finance\Statistics)
ACE'S gives a preferential rating to a company that sustains a
lively trade volume from week-to-week and month-to-month. ACE'S rating of
CEMEX's Traded
Volume: EXCELLENT.
J. PRICE GROWTH - EXCELLENT
Price growth is the 12-month increase in the price of a
stock (displayed as a percentage). As of 12/16/05, CEMEX had a 3-month growth
rate of 16.9% (vs. the Industry's 4.7% rate), a 6-month rate of 43.2% (vs.
the Industry's 16.0% rate), and a 12-month rate of 74.3% (vs. the
Industry's 28.0% rate).
(Refs.:
MSN Money\Research).
ACE'S gives a preferential rating to a company that have
demonstrated a solid capacity for high price growth and outperforming other
stocks in the Industry. ACE'S rating of
CEMEX's
Price Growth: EXCELLENT.
DISCLAIMER: ACE'S assumes no responsibilities for actions taken
by the reader(s) of this site and/or buyer(s) of ACE'S stock picks. ACE'S is
not providing investment advice. ACE'S is providing equity research
information. ACE'S do not make any claims, promises or guarantees
that the information contained in this site will result in a profit, loss or any
other desired result for the subject reader and/or buyer. The reader and/or
buyer assumes all the risk, including but not limited to loss, of capital
consequential to their investment actions. (SEE: FULL
DISCLAIMER)
|
