CX
CEMEX, S.A.B. de C.V.
$12.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 26.4% above fair value
You pay
$12.56
Bear
$7.29
Fair
$9.94
Bull
$12.59
Bear
$7.29
-42.0%
$0.58 × 14x + net cash
Fair
$9.94
-20.9%
$0.58 × 18x + net cash
Bull
$12.59
+0.2%
$0.58 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.58)
Implied Market Multiple
21.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $13.66 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $9.94 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Recent profits ($6.60/share) are 1038% above the mid-cycle average ($0.58). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 4.4x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $13.66 (from 23 analysts). Our estimate is 36% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing