Why CEMEX (CX) Stock Is Up Today

NEW YORK (TheStreet) -- CEMEX (CX) was gaining 2% to $12.74 Wednesday after beating analysts' estimates for revenue in the first quarter.

Revenue grew 8% year-over-year for the company to $3.6 billion, beating the Capital IQ Consensus Estimate of $3.36 billion by $140 million. CEMEX posted an operating EBITDA of $535 million for the quarter.

The increase in revenue was thanks to higher prices of products in local currencies and higher volumes in all regions.

"We are pleased with the growth in our operating EBITDA during the quarter, on a like-to-like basis, adjusting for the seasonal maintenance and inventory-drawdown effects, which we expect will revert throughout the rest of the year," executive vice president of finance and administration Fernando A. Gonzalez said in a press release. "We also saw positive dynamics in consolidated volumes and prices for our main products."

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TheStreet Ratings team rates CEMEX SAB DE CV as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CEMEX SAB DE CV (CX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, 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 poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 46.8% 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 year. 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 -$0.66 versus -$0.76 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.66).
  • The gross profit margin for CEMEX SAB DE CV is currently lower than what is desirable, coming in at 32.16%. Regardless of CX's low profit margin, it has managed to increase from the same period last year.
  • Currently the debt-to-equity ratio of 1.73 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 0.81, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: CX Ratings Report

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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.

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