Alexandria Cement Co. : Relatively poor pick? Maybe.

Alexandria Cement Co. relative valuation is now OVERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 31.

Our analysis is based on comparing Alexandria Cement Co. with the following peers – Sinai Cement Co., National Cement, Torah Cement Co., Suez Cement Co., Misr Cement Co. (Qena), South Valley Cement Co., Misr Beni Suef Cement Co. SAE and Holcim Maroc SA (SCEM-EG, NCEM-EG, TORA-EG, SUCE-EG, MCQE-EG, SVCE-EG, MBSC-EG and HOL-MA).

Relative Valuation

Alexandria Cement Co.’s price of EGP 8.88 is greater than CapitalCube’s implied price of EGP 7.94. At this level, CapitalCube believes that Alexandria Cement Co. is overvalued. Over the last 52 week period, the stock has fluctuated between EGP 8.63 and EGP 12.50.

Relative Valuation

Company Overview

  • Relative underperformance over the last year is in contrast with the more recent outperformance.
  • Alexandria Cement Co. currently trades at a higher Price/Book ratio (4.29) than its peer median (1.81).
  • The market expects ALEX-EG to grow faster than its peers and for the company to improve its current ROE.
  • ALEX-EG has relatively low profit margins and median asset efficiency.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • Over the last five years, ALEX-EG‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While ALEX-EG‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median PE ratio and may be factoring in some sort of a strategic play.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • ALEX-EG seems too levered to raise additional debt.

Investment Outlook

Alexandria Cement Co. has a fundamental score of 31 and has a relative valuation of OVERVALUED.

Alexandria Cement Co. is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify Alexandria Cement Co. as ‘Speculative’. In other words, not only is Alexandria Cement Co.’s Fundamental Analysis Score low at 31, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 7.94.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market expects improvement in ALEX-EG‘s current performance

The market expects more growth from ALEX-EG than the median of its chosen peers (PE of 56.17 compared to peer median of 21.24) and to improve its current ROE of 6.48%.

The company currently trades at a higher Price/Book ratio of 4.29 compared to its peer median of 1.81.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

ALEX-EG has moved to a relatively high PE from a relatively high ROE profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Alexandria Cement Co. engages in the production and sale of cement and other related building materials. Its products include clinker, ordinary Portland cement, bulk and packed sulfate-resistant cement, gypsum, bricks, and tiles. The company was founded on March 7, 1948 and is headquartered in Cairo, Egypt.

Disclaimer

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