Morgan Stanley has begun coverage of CRH (CRH, Financial), giving the construction materials company an Overweight rating and setting a price target of 80 GBp. The investment firm highlights CRH's integrated business model, which reportedly leads to superior cash conversion and returns compared to its peers focused solely on upstream operations.
Despite these strengths, CRH's stock is currently valued at a 32% discount, which Morgan Stanley views as an attractive buying opportunity, especially following a recent dip in the share price. The firm has identified CRH as a new top pick, recommending it to investors seeking potential growth in the construction materials sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for CRH PLC (CRH, Financial) is $112.31 with a high estimate of $130.50 and a low estimate of $87.50. The average target implies an upside of 22.95% from the current price of $91.35. More detailed estimate data can be found on the CRH PLC (CRH) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, CRH PLC's (CRH, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CRH PLC (CRH, Financial) in one year is $73.69, suggesting a downside of 19.33% from the current price of $91.35. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CRH PLC (CRH) Summary page.
CRH Key Business Developments
Release Date: February 27, 2025
- Total Revenue: $35.6 billion, 2% increase from the prior year.
- Adjusted EBITDA: $6.9 billion, 12% increase from the prior year.
- Margin Expansion: 180 basis points improvement.
- Earnings Per Share (EPS): Increased by 18% from the prior year.
- Net Debt: $10.5 billion at year-end, with a net debt to adjusted EBITDA ratio of 1.5 times.
- Capital Expenditure: $2.6 billion invested for growth.
- Acquisitions: $5 billion spent on 40 acquisitions.
- Dividends and Share Buybacks: $3 billion returned to shareholders.
- Quarterly Dividend: $0.37 per share, a 6% increase from the prior year.
- 2025 Financial Guidance: Expected adjusted EBITDA between $7.3 billion and $7.7 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CRH PLC (CRH, Financial) reported an industry-leading performance for 2024, with total full-year revenues of $35.6 billion, a 2% increase from the previous year.
- The company achieved an adjusted EBITDA of $6.9 billion, which is 12% higher than the prior year, along with a 180 basis points margin expansion.
- CRH PLC (CRH) completed 40 value-accretive acquisitions in 2024, investing $5 billion, which contributed to their growth and market leadership.
- The company maintained a strong balance sheet with a net debt to adjusted EBITDA ratio of 1.5 times, allowing for continued investment and shareholder returns.
- CRH PLC (CRH) declared a new quarterly dividend of $0.37 per share, representing an annualized increase of 6%, continuing their track record of over 40 consecutive years of dividend growth.
Negative Points
- The company faced challenging weather conditions in the United States, which impacted activity levels and operations in several regions.
- There was subdued demand in the new build residential segment, affecting the performance of CRH PLC (CRH)'s Americas Building Solutions business.
- The company anticipates mid-single-digit cost increases in 2025 due to inflationary pressures in labor, raw materials, and subcontractor costs.
- Currency exchange posed a headwind of $50 million due to a stronger US dollar relative to other currencies.
- CRH PLC (CRH) expects a more normal year for land or long-lived asset sales in 2025, which may not match the higher-than-normal sales seen in 2024.
