Cemex S.A.B. De C.V (CX) Is Today's Roof Leaker Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Cemex S.A.B. de C.V ( CX) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cemex S.A.B. de C.V as such a stock due to the following factors:

  • CX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $162.4 million.
  • CX has traded 7.9 million shares today.
  • CX is trading at 1.72 times the normal volume for the stock at this time of day.
  • CX crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on CX:

CEMEX, S.A.B. de C.V., through its subsidiaries, engages in the production and sale of cement, ready-mix concrete, aggregates, and other construction materials in Mexico, the United States, Northern Europe, the Mediterranean, South America, the Caribbean, and Asia. The stock currently has a dividend yield of 3.7%. Currently there are 7 analysts that rate Cemex S.A.B. de C.V a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Cemex S.A.B. de C.V has been 11.8 million shares per day over the past 30 days. Cemex S.A.B. de C.V has a market cap of $12.4 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 15.2% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cemex S.A.B. de C.V as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • CEMEX SAB DE CV has improved earnings per share by 38.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CEMEX SAB DE CV continued to lose money by earning -$0.79 versus -$1.23 in the prior year. This year, the market expects an improvement in earnings (-$0.34 versus -$0.79).
  • Despite the weak revenue results, CX has outperformed against the industry average of 11.5%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, CX maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Construction Materials industry and the overall market, CEMEX SAB DE CV's return on equity significantly trails that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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