|
| |
 Grupo
Simec SA de C.V. (AMEX: SIM) is a mini-mill steel
producer based in Mexico that manufactures a broad range of small and
medium-sized structural steel products.
Simec's products are used primarily
in the residential, commercial and industrial construction markets.
The company currently owns and operates (i) Mexico’s largest
non-flat structural steel mini-mill, located in Guadalajara, Jalisco, (ii) a
mini-mill in Mexicali, Baja California Norte, (iii) a mini-mill in Apizaco,
Tlaxcala, (iv) a melt shop in Cholula, Puebla and (v) steelmaking centers in
Canton and Lorain, Ohio, and value-added rolling and finishing facilities in
Canton, Lorain and Massillon, Ohio; Lackawanna, New York; Gary, Indiana; and
Hamilton, Ontario.
The Stock's price gained
136.4% over the past 3 months; 161.7% over the past 6
months; and 337.0% over the past 12 months.
Simec is classified as a mid-cap company.
The Company's market capitalization: $2.44 billion. The Company's
steel operations commenced in 1969.
Simec's administrative office is
located in Guadalajara, Jalisco, Mexico.. Approximately 4,260 people are
employed by
Simec.
Sector: Basic Materials; Industry: Iron & Steel; Ticker:
SIM; Exch:
AMEX;
10/13/06 Closing Price:
$17.35)
STOCK GRADE (ASG): 61.80 (EXCELLENT!)
BUSINESS & FINANCIAL SUMMARY
(Yahoo)
EXPANDED BUSINESS DESCRIPTION
(Reuters)
STOCK INFO/RESEARCH
(MSN)
OWNERSHIP
(MSN)
KEY DEVELOPMENTS
(MSN),
RECENT NEWS
(MSN) &
HEADLINES (Yahoo)
HISTORICAL PRICES (Yahoo)
&
PRICE CHART
(IQChart)
RISK LEVEL
(Reuters)
COMPANY'S WEB SITE
STOCK'S CORE
STRENGTHS (SEE: Table Below)
| Management's Effectiveness (12 Mo.) |
. . . |
Return on Equity: |
23.29% |
| Profitability (12 Mo.) |
. . . |
Profit Margin: |
9.03% |
| Stock's Growth Record (12 Mo.) |
. . . |
Revenue: |
94.31% |
|
. . . |
EPS: |
284.67% |
|
. . . |
Price: |
55.69% |
|
. . . |
Dividend: |
NA |
| PE & EPS (12 Mo.) |
. . . |
Price/Earnings: |
13.18 |
|
. . . |
Earnings/Share: |
1.23 |
| Price
/ Share (Pick Date Closing Price) |
. . . |
Pick Date 10/13/2006: |
$17.35 |
| Price
/ Share (Current) |
. . . |
Current Price |
Quote |
GRUPO SIMEC SA DE C.V. -
EVALUATION
Simec'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 a proprietary variable that was devised by ACE'S to measure the
quality of a stock for investment. Simec's ASG value of 61.80 is
EXCELLENT.
A. MANAGEMENTS EFFECTIVENESS - POOR
B. PRODUCTS & SERVICES, SET OF - GOOD
C. SALES - EXCELLENT
D. CASH FLOW, FREE -
POOR
E. PROFITABILITY - AVERAGE
F. PRICE-EARNINGS RATIO (P/E) - POOR
G.
FINANCIAL HEALTH -
EXCELLENT
H.
MARKET CAPITALIZATION -
EXCELLENT
I.
TRADED VOLUME -
AVERAGE
J.
PRICE GROWTH - EXCELLENT
A. MANAGEMENTS EFFECTIVENESS - POOR
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 by ACE'S as a general indication
of the company's efficiency.
Simec's ROE (ttm) of 23.7% is lower (by 9.50%) than the Industry's ROE of
33.2%; and higher (by 1.20%) than the S&P 500's ROE of 22.5%.
(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
Simec's Management's Effectiveness: POOR (LOWER THAN INDUSTRY'S AVERAGE).
^ Back to Evaluation
B. PRODUCTS & SERVICES -
GOOD
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.
Simec's core business products: Specialty steel, structurals, light
structurals and rebar.
Simec's rolling mills at the Guadalajara mini-mill use
billet to produce I-beams, channels, angles, steel bars (round and
square rods), flat bar, rebar and special products. Simec’s rolling mills at the
Mexicali mini-mill use billet to produce rebar,
steel bars (round and square), commercial angles (angles of less than three
inches in width) and flat bar. Simec’s rolling
mills at the Apizaco and Cholula mini-mill use billet to produce steel bars
(round and square rods) flat bar, rebar and
specialty products primarily for the automotive industry.
Simec also manufactures cold drawn rods. These rods are used to manufacture
industrial products requiring steel with
special properties, such as tensile strength and flexibility. Products of this
type include automobile axles, screws and bolts.
Rebar is used primarily for strengthening concrete in highways, buildings and
other construction applications. In 2001, the
Company began production at the Guadalajara facility of additional widths of
hexagonal bars, lighter channels of a width of 5
inches and wider ranges of widths of spring flat bars. In 2002, the Company
began production at the Guadalajara facility of
additional widths of spring flat bars and round bars-SBQ.
Simec, through its majority-owned subsidiary, Republic, manufactures hot rolled
bars, cold finished bars, semi-finished
seamless tube rounds and other semi-finished trade products. Republic operates
steelmaking centers in Canton and Lorain,
Ohio, and value-added rolling and finishing facilities in Canton, Lorain and
Massillon, Ohio; Lackawanna, New York; Gary,
Indiana; and Hamilton, Ontario, Canada. I-beams, channels, structural angles
(angles greater than three inches width) and
rebar are generally sold to construction contractors, fabricators, steel service
centers and manufacturers who cut, bend,
shape and fabricate the steel to meet engineering or end product specifications.
The construction industry uses these
products primarily in the manufacture of commercial buildings and residential
housing, as well as in the manufacture of a
wide variety of industrial products. Round and square rods and flat bar are used
to manufacture a wide variety of products,
including gratings, steel floors and roof joists, safety walkways, ornamental
furniture, stair railings and farm equipment.
SPECIALTY STEEL
Steel can be produced with different amounts of aluminum, nickel and
ferroalloys, which give it special characteristics, or
"grades." According to these characteristics, Simec's specialty steel
product line can produce high carbon steel, tool steel,
machinery steel and stainless steel. Depending on the shape of the finished
product, the main product lines are 0.5" to 12"
billets and round, rectangular and square bars.
Simec's specialty steel product line are made to fulfill
specific customer demands, including chemical
composition, machinability, hardness, ductility and surface condition. The specialty steel products are used as raw
materials for the production of transmissions,
suspensions, tools, molds, agricultural machinery and oil equipment.
STRUCTURALS
The structurals line consist of beams, channels, flat bars and angles with
sections from 3" to 8". Structurals are mainly used for construction of
commercial and office buildings and for electrical towers and in the production
of trucks and large vehicles in the automotive sector. Structurals are
considered a commodity product due to the general acceptance by most customers
of standard industry specifications.
LIGHT
STRUCTURALS
The light structurals product line includes angles, flat bars and merchant
bars (round, square and hexagonal bars) with sections from 0.75" to 2.75". Light
structurals are used mainly for construction to produce joists, which are light,
slim and flexible prefabricated structures used for ceilings of industrial
buildings and warehouses. Light structurals are considered a commodity product
due to general acceptance by most customers of standard industry specifications.
REBAR
The rebar product line are reinforced, corrugated round steel bars with sections
from 0.375" to 1.5" in diameter. Rebar is only used by the construction sector
to reinforce concrete. Rebar is considered a commodity product due to general
acceptance by most customers of standard industry specifications.
ACE'S
gives a preferential rating to a company who have
a variety of 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 Simec's products and services
are assessed and used by its target market - the company's
sales.
ACE'S rating of
Simec's line-up of Products & Services: GOOD
^ Back to Evaluation
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.
Simec's annual revenue was $2,011.31M in 12/2001, $2,196.32M in 12/2002, $2,930.14M in 12/2003,
$5,812.19M in 12/2004 and $13,064.42M in 12/2005. Relative to 12/2001's revenue, the
Company's sales increased 9.20% in 2002; 45.68% in2003; 191.96% in 2004 and
549.55% in 2005,
(Ref.:
MSN Money\Financials).
Simec's ttm annual sales of $1,960.8M was 673.19% higher than the Industry's
sales of $253.6M.
Simec's ttm Sales growth rate of 230.70% was 210.4% points higher than the
Industry's rate of 20.30%.
(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. Simec's
year-to-year annual revenues have progressively increased
from 2001 to 2005. ACE'S rating of
Simec's Sales Growth Rate: EXCELLENT.
^ Back to Evaluation
D. CASH FLOW, FREE -
POOR
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.
Simec's cash flow during the past 5 years: $413.17M in 12/2001;
$329.39M in 12/2002; $409.36M in 12/2003; $909.35M in 12/2004; and
-$1,274.99M in
12/2005. Relative to 12/2001, the Company's cash flow decreased 20.28% in
2002, 0.92% in2003, increased 120.09% in 2004, and decreased 418.59% in 2005.
(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. Simec's
year-to-year cash flow have an average decrease of 77.42% from 2001 to 2005,
with 3 instances when the cash flow decreased and 1 instance when same increased. ACE'S rating of
Simec's Cash Flow: POOR.
^ Back to Evaluation
E. PROFITABILITY - AVERAGE
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.
Simec's annual Net Income, for the past 12 months, of $20.9M is
266.67% higher than the
Industry's Income of $5.70M). For the past 5 years, Simec's annual
Net Income are: $699.13M in 12/2001; $202.75M in 12/2002; $308.19M in 12/2003; $1453.23M
in 12/2004; and $1326.23M in 12/2005. Relative to 12/2001, the Company's net
income decreased 71.00% in 2002, 55.92% in2003, increased 107.86% in 2004 and
89.70% in
2005.
(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. Simec's
year-to-year annual Net Income have an average increase of 17.66% from 2001 to 2005,
with 2 instances when the Net decreased and 2 instances when same increased.. ACE'S rating of
Simecs Profitability: AVERAGE.
^ Back to Evaluation
F. PRICE-EARNINGS RATIO (P/E) - POOR (HIGHER 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.
Simec has a P/E ratio of 13.85 (ttm) which is
3.47
points higher - or 33.43% more -
than the
Industry's P/E of 10.38 (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
Simec's P/E Ratio: POOR (HIGHER THAN INDUSTRY'S AVERAGE).
^ Back to Evaluation
G. FINANCIAL HEALTH -
EXCELLENT (LOWER THAN INDUSTRY'S AVERAGE).
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.
Simec's 0.00 Debt/Equity Ratio (latest 12 months) is 0.56% points less than
the Industry's Ratio of 0.56, and 1.27% points less than the S&P 500's Ratio 1.27.
.
(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
Simec's
Debt Ratio: EXCELLENT (LOWER THAN INDUSTRY'S AVERAGE).
^ Back to Evaluation
H. MARKET CAPITALIZATION - EXCELLENT
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. ACE'S assigns an
Excellent rating to Small Cap stocks; Good to Mid Caps; Average to Big/Large
Caps; and Below Average to Mega Caps. ACE'S excludes Micro
and Nano Caps in its stock picks.
Simec is classified as a mid cap company with a market
capitalization of $2,436.03M and with outstanding shares of
140.41M. (Ref.:
Reuters)
ACE'S gives a preferential rating to small and mid cap companies. ACE'S rating of
Simec's
Market Cap: EXCELLENT.
^ Back to Evaluation
I. TRADED VOLUME - AVERAGE
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.
Simec has an 3-month Average Daily Volume of 375,121 shares; and
a 10-day Average Daily Volume of 343,600 shares.
(Refs.:
Yahoo! Finance\Statistics).
ACE'S assigns an Excellent rating for
+1,000,000 trading volumes; Good for 500,001-999,999 volumes; Average for
100,000 - 500,000 volumes; and Below Average for -100,000 volumes.
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
Simec's Traded
Volume: AVERAGE.
^ Back to Evaluation
J. PRICE GROWTH - EXCELLENT
Price growth is the 12-month increase in the price of a
stock (displayed as a percentage). As of 10/14/06, Simec had a 3-month growth
rate of 136.4% (vs. the Industry's 9.9% rate), a 6-month rate of 161.7% (vs.
the Industry's 1.2% rate), and a 12-month rate of 337.0% (vs. the
Industry's 60.5% 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
Simec's
Price Growth: EXCELLENT.
^ Back to Evaluation
|
