Two Texas Industries Insiders Think Cement Demand Will Go Up

We can compare Texas Industries to Cemex SAB de CV (NYSE:CX), CRH PLC (NYSE:CRH), Eagle Materials, Inc. (NYSE:EXP), and Vulcan Materials Company (NYSE:VMC). These companies are generally struggling in terms of profitability as well: Cemex is expected to see losses of 8 cents per share this year, Eagle trades at 51 times trailing earnings, and Vulcan is unprofitable on a trailing basis as well with a current-year P/E of over 200. CRH, with a trailing P/E of 19, is the only one which doesn’t look very overvalued at first glance. Of course, the theory is that over time a stronger economy will boost demand and all four of these peers carry betas of over 1.5 (Texas Industries’ is 1, interestingly). However, only Eagle reported strong revenue growth in its most recent quarter compared to the same period in the previous year. As we’d mentioned, that company is at least profitable on a trailing basis and may be a better prospect for investors who see this consensus buying as bullish on building materials in general.

We wouldn’t rule out the possibility of these purchases being profitable- as we’ve noted, Texas Industries is up strongly in the last year even with the Street forecasting losses next year. Yet the stock seems quite speculative due to its poor bottom line (although the same is the case for many other cement companies). Perhaps Texas Industries is best placed on a watch list in case of positive developments or earnings surprises.

Disclosure: I own no shares of any stocks mentioned in this article.