Wednesday, January 8, 2020

The Key Mexico Market Is Likely Bottoming, But Cemex Management Has A Lot To Prove

More clunker than clinker over the last five years, Cemex (CX) has chopped steadily downward since mid-2017 as the company continues to see weak results in Mexico (compounded by share loss), lackluster results in the U.S., and frankly not much good news anywhere in the business. On top of that, I’m starting to question if management has the right idea regarding its asset sale initiatives – selling assets and deleveraging is a good idea on balance, but I’m worried that management may be selling the flowers and keeping the weeds.

I don’t think the operating environment in Mexico is going to get much worse, but that’s not a compelling bull thesis, nor is “but it’s cheap!” I do think the market is pricing in pretty unimpressive performance, but shouldn’t it? When’s the last time Cemex really impressed anybody with its execution? There could be value here, but if I want to go shopping for bargains leveraged to Mexican infrastructure I’d rather own PINFRA (OTCPK:PUODY) or pay up for a company like Grupo Aeroportuario del Centro Norte (OMAB).

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The Key Mexico Market Is Likely Bottoming, But Cemex Management Has A Lot To Prove

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