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 $164.8 million.
  • CX has traded 19.5 million shares today.
  • CX is trading at 3.07 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 6 analysts that rate Cemex S.A.B. de C.V a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cemex S.A.B. de C.V has been 13.5 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 14.7% year-to-date as of the close of trading on Tuesday.

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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 disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 32.39% and other important driving factors, this stock has surged by 31.72% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • CEMEX SAB DE CV has improved earnings per share by 32.4% 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 (-$0.41 versus -$0.79).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for CEMEX SAB DE CV is currently lower than what is desirable, coming in at 34.27%. Regardless of CX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -3.82% trails the industry average.
  • 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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