CRH Earnings: Raising Fair Value by 20% As Favorable US Construction Outlook Supports Higher Margins

Narrow-moat CRH’s stellar fiscal 2023 results and superior guidance to peers reflect why we believe it is the most defensive of the (traditionally) listed European building manufacturers. Price increases in the mid to high teens for building materials underpinned its 14% EBITDA growth year over year, translating into 120 basis points of margin expansion. Large multiyear infrastructure and commercial construction projects, backed by recently signed legislation in the US, combined with recent astute portfolio management, support structurally higher profitability, which underpins the increase in our fair value estimate to $68 per share from $55 (to GBX 5,400 from GBX 4,400). Shares still appear rich, given the 75% rise in the share price during the past year, which we partially attribute to nonfundamental reasons resulting from CRH moving its primary listing to New York.