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Homex Development Corp Stock Upgraded (HXM)

NEW YORK ( TheStreet) -- Homex Development (NYSE: HXM) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including generally poor debt management, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • HXM, with its decline in revenue, slightly underperformed the industry average of 23.0%. Since the same quarter one year prior, revenues fell by 30.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for DESARROLLADORA HOMEX SA is rather low; currently it is at 23.50%. It has decreased significantly from the same period last year.
  • Net operating cash flow has decreased to -$116.58 million or 36.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Desarrolladora Homex, S.A.B. de C.V. operates as a vertically integrated home development company principally engaged in the development, construction, and sale of affordable entry-level, middle-income, and tourism housing in Mexico; and affordable entry-level housing in Brazil. The company has a P/E ratio of 8.5, above the average real estate industry P/E ratio of eight and below the S&P 500 P/E ratio of 17.7. Homex Development has a market cap of $1.04 billion and is part of the financial sector and real estate industry. Shares are up 10% year to date as of the close of trading on Wednesday.

You can view the full Homex Development Ratings Report or get investment ideas from our investment research center.

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