HXM  Desarrolladora Homex

Exchange

NYSE

Sector

Basic Industries

Industry

Homebuilding

Market Cap.

54.1M

Vuru Grade

56.87/100

Current Price

$0.97
+0.000 (+0.000%)

Growth Price

$2.83
Undervalued by 192.01%

Stability Price

$17.58
Undervalued by 1,716.44%

Company Metrics

  • P/E 0.53
  • P/S 0.05
  • P/B 0.96
  • EPS -18.942
  • Cash ROIC -6.35%
  • Cash Ratio 0.25
  • Dividend 0 / 0%
  • Avg. Vol. 469,860.00
  • Shares 111.52M
  • Market Cap. 54.1M

Company Description

Desarrolladora Homex, S.A.B. de C.V. operates as a vertically integrated home development company principally engaged in the development, construction, and sale of affordable entry-level, middle-income, and tourism housing in Mexico; and affordable entry-level housing in Brazil. As of December 31, 2010, the company had land reserves of approximately 82.3 million square meters, which include the ti... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

IMPORTANT DESARROLLADORA HOMEX SAB DE CV INVESTOR ALERT: Wolf Haldenstein ...
GlobeNewswire (press release) - Mar 17, 2017
Investors who have incurred losses in the ADR's of Desarrolladora Homex S.A.B. de C.V. are urged to contact the firm immediately at classmember@whafh.
Homex Restructuring Promises Big Returns For Early Investors, With Gains Of 30 ...
Seeking Alpha - May 27, 2014
The Mexican government scaled back housing subsidies in 2011, causing severe financial distress not just to Homex, but to all homebuilders.
JPMorgan's Top 100 Indexed Emerging Market ADRs
Seeking Alpha (blog) - Jan 12, 2009
Emerging market stocks were all the rage up until the middle of last year. Stocks from Brazil, India, Russia and China ((BRICs)) were gobbled up by investors like there was no tomorrow.
A Great Opportunity To Invest In Mexico? (EWW, MXF, HXM)
ETF Daily News - Mar 19, 2013
Finally, one attractive Mexican company is Desarrolladora Homex S.a.b de CV ADR (NYSE:HXM), a Mexican homebuilder and prison-building company, which trades on a P/E of 6 times.
George Soros Buys The Home Depot Inc., Union Pacific Corp., RR Donnelley ...
GuruFocus.com - Feb 18, 2009
Inc., Union Pacific Corp., R.R. Donnelley & Sons Company, Desarrolladora Homex S.A. de C.V., Hologic Inc., BRINKS HOME SECURITY HOLDINGS INC, H.J.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for HXM to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate HXM's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$0.97 Current Price

$2.83 Growth Price (DCF)

Undervalued by 192.01%


Growth Rate Assumed by Market: -328.37%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


HXM's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$17.58 Stability Price (EPV)

Undervalued by 1,716.44%


Discount Rate: 15.0%

$2.46 Book Price

Undervalued by 153.72%


Very Poor Cash Return on Invested Capital over the past 5 years

HXM has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

HXM has lost $6.35 of cash for every $100 invested.
Figures in MXN. Fiscal year ends in December
20082009201020112012
Free Cash Flow -3.80B 448.78M -1.38B 1.33B -4.97B
divided by
Invested Capital 20.60B 25.06B 24.93B 25.80B 33.75B
Cash ROIC -18.42% 1.79% -5.54% 5.14% -14.72%

Shrinking Return on Equity over the past 5 years

HXM has been shrinking returns with capital that shareholders have invested. This is a negative sign and demonstrates that both the business and management performance are weakening over time.

HXM has generated $12.33 of Earnings for every $100 of Shareholders' Equity.
Figures in MXN. Fiscal year ends in December
20082009201020112012
Net Income 1.62B 1.84B 1.51B 1.30B 1.60B
divided by
Stockholders' Equity 11.27B 12.99B 12.13B 13.49B 14.56B
Return on Equity 14.36% 14.18% 12.46% 9.67% 10.98%

Poor Business Performance over the past 10 years

HXM's inability to produce positive free cash flow for the majority of the past 10 years is concerning. It should be a red flag, since this company does not have a track record of delivering results for shareholders. This could be due to poor management or the nature of its business.

HXM has been losing money for the majority of the past 10 years.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Free Cash Flow -289.37M -1.31B -290.11M 967.28M -20.56M -3.80B 448.78M -1.38B 1.33B -4.97B

Weak Balance Sheet

HXM's financial position is not ideal. The key is to check whether HXM is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Cash 219.83M 510.73M 1.32B 2.33B 2.21B 1.14B 3.12B 3.44B 3.99B 3.51B
Current Assets 3.24B 5.89B 10.58B 12.10B 14.79B 18.65B 20.84B 23.28B 25.57B 22.98B
Total Assets 3.30B 6.77B 14.12B 18.89B 24.18B 30.51B 34.57B 36.64B 41.37B 51.35B
Current Liabilities 1.65B 2.18B 3.62B 6.03B 6.96B 8.76B 6.38B 8.28B 11.58B 14.09B
Total Liabilities 1.99B 3.05B 8.34B 11.66B 14.55B 19.23B 21.58B 24.51B 27.88B 36.78B
Stockholder' Equity 1.31B 3.72B 5.77B 7.22B 9.63B 11.27B 12.99B 12.13B 13.49B 14.56B
Current Ratio 1.96 2.70 2.93 2.01 2.12 2.13 3.27 2.81 2.21 1.63
TL-to-TA 0.60 0.45 0.59 0.62 0.60 0.63 0.62 0.67 0.67 0.72

Consistent Reinvestment of Profits over the past 10 years

HXM has consistently retained profits. This may put HXM in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, HXM can greatly improve their long-term economic picture.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Retained Earnings 380.85M 1.11B 2.08B 3.22B 5.58B 7.51B 9.35B 8.66B 9.96B 12.09B
Retained Earnings Growth - 191.70% 86.88% 55.26% 73.08% 34.59% 24.52% -7.40% 15.07% 21.35%

Competitive Industry over the past 10 years

HXM is likely operating in an industry with medium to low barriers to entry. This may mean that HXM doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that HXM invests heavily in R&D and Sales, General & Administrative expenses.

Only $9.75 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Net Income 311.96M 706.04M 999.03M 1.34B 2.23B 1.62B 1.84B 1.51B 1.30B 1.60B
divided by
Revenue 2.80B 5.31B 8.54B 12.94B 16.22B 18.85B 19.43B 19.65B 21.85B 28.75B
Net Profit Margin 11.12% 13.30% 11.70% 10.35% 13.77% 8.59% 9.48% 7.69% 5.97% 5.56%

Inconsistent Gross Profit Margins over the past 10 years

HXM has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$36.33 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Gross Profit 783.36M 1.61B 2.71B 4.09B 5.18B 5.38B 5.68B 5.92B 21.85B 6.27B
divided by
Revenue 2.80B 5.31B 8.54B 12.94B 16.22B 18.85B 19.43B 19.65B 21.85B 28.75B
Gross Margin 27.93% 30.37% 31.72% 31.61% 31.94% 28.53% 29.22% 30.15% 100.00% 21.80%

Low Capital Intensity over the past 10 years

HXM has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that HXM may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

16.85% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Capital Expenditure 13.28M 218.24M 149.93M 291.12M 680.48M 563.72M 89.35M 279.64M 38.55M 79.77M
divided by
Net Income 311.96M 706.04M 999.03M 1.34B 2.23B 1.62B 1.84B 1.51B 1.30B 1.60B
Capital Expenditure Ratio 4.26% 30.91% 15.01% 21.73% 30.48% 34.82% 4.85% 18.50% 2.96% 4.99%

No Dividend History over the past 10 years

HXM has never distributed dividends or has recently suspended their dividend distribution.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 40.25M 47.00M 54.16M 55.98M 55.95M 55.81M 55.81M 55.79M 55.78M 111.52M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End - 23.59 30.68 59.07 49.82 21.78 33.86 33.58 16.87 12.23
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

HXM has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in MXN. Fiscal year ends in December
2003200420052006200720082009201020112012
Shares Outstanding 40.25M 47.00M 54.16M 55.98M 55.95M 55.81M 55.81M 55.79M 55.78M 111.52M
Stock Bought Back - -14.35% -13.22% -3.25% 0.05% 0.24% 0.01% 0.02% 0.01% -49.98%
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