Texas Industries

1
Texas Industries

• Sector Industrial Goods
• Industry Cement

2
Business

• Supply cement, consumer and aggregate product
  building materials
• Used in all areas of construction
• Primary Markets
• California and Texas
• receive highest federal funding
• growing population increases construction
• 1 producer in TX and 2 in CA

3
Current Events

• Spin Off of Steel operations in 2005
• No longer profitable
• Skewed financial statements
• Increase production of materials
• Cement by 50
• Accounted for 48 of revenues in 2006
• Gross Profit Margin of Cement 26.9

4
Industry Economy

• Cons
• Bad weather delaying housing starts
• Decline in residential construction
• Skittish home buyers and backlog of unsold homes
• Pros
• Texas not affected by decline in residential
  construction
• Highway public works in good shape
• Increasing cement prices (12 per ton)

5
Valuation Inputs

• Beta 1.63
• Monthly regression
• Premium 4
• Risk Free Rate 4.98
• Market Return 9
• Conservative 18 for 5 years

6
Valuation

• 2 stage dividend discount model
• 18 50.28
• 25 62.52
• 30 72.65
• 35 84.06
• Gordon Growth
• 49.68 Overvalued
• I dont believe these numbers show true value

7
Ratios

• Company Industry
• Quick 1.82 0.90
• Current 2.58 1.40
• P/E 17.50 16.07
• ROE 11.70
• ROA 10.36
• Profit Mar 11.15
• Op. Marg 16.12

8
Analysts Recommendations

• Current 1 Month 1 Year
• BUY 3 3 0
• Outperf. 1 1 1
• Hold 1 1 1
• Sell 0 0 0
• Mean 1.6 1.6 2.5

9
Stock Performance
VMC Vulcan Materials CX Cemex
10
Technical Analysis
11
Technical Analysis
12
Recommendation

• Buy 10 times (currently own 50 shares)
• Stop Loss Price 60.48
• Average of 300 SMA and purchase price
• Risk to Capital
• 0.49 lt 1