Heidelberg Materials: Full-Year Profit Guidance Raised for Third Consecutive Quarter After Strong Q3

Narrow-moat Heidelberg Materials released an unexpected trading update, reporting third-quarter operating profit growth of 24%, which will exceed company-compiled consensus by 11%. The better-than-expected third-quarter profitability has led management to raise its full-year profit guidance by 4.5% at the midpoint—the third consecutive quarter that the group has raised its profit guidance. Our estimates are broadly in line with the revised guidance, and we maintain our EUR 80 fair value estimate. Although shares are marginally undervalued, CRH remains our preferred pick in the sector due to its significant exposure to the United States, which enjoys a favorable outlook for construction spending due to recently signed legislative acts.