Recommendation
Despite the growth we’ve seen to date, we continue to believe Caribbean Cement will realize significant growth in the upcoming year, driven by the continued increase in the supply of infrastructure developments within the construction industry and in turn, the high demand for cement. In 2020, the company repositioned its balance sheet significantly by reducing its debt burden. The Company continues to reduce its debt which has reduced its finance costs and its FX exposure, both of which have weighed on profitability. Given the improvement in financial performance and increased capacity for growth following the reduction of debt, CCC has indicated its intention to consider dividend payments which makes the stock more attractive from a total return perspective. Additionally, with the high demand for its product, CCC intends to increase its production capacity which signals the potential for even higher revenue, driven by higher output. The positive outlook for the Company continues to be reflected in our fair value estimate which implies that CCC is undervalued. With that said, we maintain our OVERWEIGHT recommendation for the stock.
| Stock | CCC |
| Close Price | 106.12 |
| Estimated Fair Value | 153.32 |
| Year to Date Return | 68.95% |
| Dividend Yield | 0.00% |
| Trailing P/E | 17.10 |
| Forward P/E | 13.04 |
| Potential Upside | 43.54% |
| Recommendation | OVERWEIGHT |
As at September 8, 2021
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