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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