What Does CEMEX, S.A.B. de C.V.'s (BMV:CEMEXCPO) Share Price Indicate?

CEMEX, S.A.B. de C.V. (BMV:CEMEXCPO), is not the largest company out there, but it received a lot of attention from a substantial price increase on the BMV over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine CEMEX. de’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for CEMEX. de

What's The Opportunity In CEMEX. de?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that CEMEX. de’s ratio of 7.72x is trading slightly below its industry peers’ ratio of 9.17x, which means if you buy CEMEX. de today, you’d be paying a reasonable price for it. And if you believe CEMEX. de should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since CEMEX. de’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will CEMEX. de generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of CEMEX. de, it is expected to deliver a relatively unexciting earnings growth of 1.9%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in CEMEX CPO’s growth outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at CEMEX CPO? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on CEMEX CPO, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing CEMEX. de at this point in time. For example, we've found that CEMEX. de has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in CEMEX. de, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.