Cemex's Shares Got Crushed: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Cemex (NYS: CX) shares got fitted with concrete overshoes Monday -- and then got dumped unceremoniously into the river, where they sank 12%.
So what: Why? About the only news of note, it appears, is that CNBC's Jim Cramer has decided he doesn't like the stock. (Horrors!) In a column on Seeking Alpha that appeared Sunday, an anonymous poster going by the name "Efsinvestment" recapped a recent Cramer rant and reminded investors that Cemex has a bad balance sheet, is losing money, and has "horrible profit margins."
Now what: Cemex generated $1.2 billion in free cash flow over the past year and has a history of generating even more cash -- all the way through the Great Recession. It's selling for an enterprise value-to-free cash flow ratio of 15.5, and most Wall Street analysts peg it for 12.5% long-term growth. I wouldn't call Cemex a great bargain today -- but I'm not sure it deserves the drubbing it received Monday, either.
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At the time this article was published Fool contributorRich Smithdoes not own (or short) shares of any company named above. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.
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