NEW YORK (TheStreet) -- Shares of cement company CEMEX (CX - Get Report) fell more than 4% and touched a 52-week low of $8.90 on Friday after Longbow Research downgraded the stock to "neutral" from "buy."
Earlier this month, CEMEX announced it had closed a series of transactions with Holcim. CEMEX acquired all of Holcim's assets in the Czech Republic, along with Holcim's Gador cement plant and Yeles cement grinding station in Spain. CEMEX also divested its assets in western Germany to the Swiss Holcim.
CEMEX paid 45 million euros in cash to Holcim as part of the transactions, and anticipates a recurring improvement in its EBITDA of approximately $20 million to $30 million, including synergies.
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Separately, 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 impressive record of earnings per share growth, notable return on equity and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CEMEX SAB DE CV has improved earnings per share by 36.0% 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 -$0.66 versus -$0.76 in the prior year. This year, the market expects an improvement in earnings (-$0.31 versus -$0.66).
- CX, with its decline in revenue, underperformed when compared the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. 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 34.14%. 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 -2.53% trails the industry average.
- CX has underperformed the S&P 500 Index, declining 21.93% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: CX Ratings Report