Cemex Produces Surprising Margin Strength Despite A Sharp Decline In Mexican Volumes

The last thing Cemex (CX) needed as it was trying to get its operational house in order and reduce its debt burden was a global recession, and yet that’s what the 2020 dance card gave them. To management’s credit, the business has held up surprising well given the circumstances, but this downturn does still push out the expected (or perhaps “hoped for”) improvements out a little further.

Back in mid-April, just a bit after the markets had passed the point of peak panic, I wrote that, while I thought Cemex was undervalued, investors were also “spoiled for choice” among other beaten-down stories. Cemex shares are up almost 50% since then, and although Ternium (TX) and Gerdau (GGB) have done even better, Cemex has been a standout performer among the infrastructure names I was looking at at that point. While the shares do still offer some upside from here, I believe that upside is now more dependent on drivers outside of management’s control, including a recovery in Mexico and an infrastructure bill in the U.S..

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Cemex Produces Surprising Margin Strength Despite A Sharp Decline In Mexican Volumes