Covid-19 Further Complicates An Already-Complex Outlook For Cemex

Assessing the prospects of Cemex (CX) was already complex enough – the company had been losing share in an underperforming Mexican market and appeared to be lagging its peers in the U.S., while also making some curious (if not questionable) asset disposal decisions. Now Covid-19 adds entirely new challenges and uncertainties to the operating outlook and model.

First things first, I believe Cemex will survive this unexpected downturn unless the Covid-19 outbreak somehow sparks a long-lasting global recession (or worse…). I also believe today’s valuation likely does not reflect the underlying value of the business as a going concern, nor on a sum-of-the-parts basis. That all being said, Cemex management has not impressed anybody in recent years with its performance, and there are a lot of beaten-down companies to choose from now that don’t have the same long-term operating issues.

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Covid-19 Further Complicates An Already-Complex Outlook For Cemex