CRH Maintains Its Robust Full-Year Profit Guidance; Shares Are Undervalued

Narrow-moat CRH’s third-quarter trading statement has reiterated why we view the business as the most defensive in our coverage of European building manufacturers. Third-quarter EBITDA growth of 14% was ahead of sales growth of 13%, a rare feature in the building materials sector this year, which has faced significant cost inflation. CRH’s profit outperformance, compared with Holcim and HeidelbergCement, is largely attributable to its more sizable exposure to the U.S. and light building materials, where cost pressure has been less severe than Europe. We reiterate CRH is our preferred pick and maintain our GBX 3,950 fair value estimate. Shares are currently undervalued, offering investors nearly 20% upside at current levels.