oldjoe1
26 Apr 2018
CRH, Strong Growth Going Forward........ CRH........CRH PLCtrading update yesterday bullish on second half.<a href='[link] target='window'>[link] write up here.........<b>One Footsie dividend growth stock I’d buy and one I’d sell todayRupert Hargreaves | Wednesday, 25th April, 2018</b>Building materials company CRH (LSE: CRH) might not look like a traditional income stock at first glance, but current City forecasts suggest this business is going to grow into one over the next few years.Indeed according to City figures, over the next two years CRH’s dividend payout to investors is expected to grow by around 10% to €0.75 per share by 2019. But to me, this looks like a conservative forecast given CRH’s management has always prioritised investor returns.For example, the firm announced today a €1bn share buyback to return additional capital, even though trading during the first quarter has been mixed. Thanks to “prolonged winter weather conditions and the timing of Easter holidays” first quarter like-for-like sales declined 2%. Group earnings before interest tax depreciation and amortisation (EBITDA) are expected to be in line with last year’s print.Nevertheless, after this minor setback, management is expecting EBITDA to be ahead of last year in the second half “in the absence of any major market dislocations,” according to its trading update issued today for the three months ended 31 March.Improving the portfolioCRH’s management is always on the lookout for ways to improve performance. Thanks to these efforts, earnings per share have more than doubled over the past six years. And it doesn’t look as if the enterprise is going to slow down anytime soon.During the first quarter, the company spent €150m on six bolt-on acquisitions and is planning €1.5bn-€2bn for further portfolio divestments over the “medium term” as the group tries to streamline its portfolio and improve overall returns. While some of this divestment cash will be returned to investors, I believe some will also be invested in new growth opportunities.Analysts have pencilled in earnings per share growth of 24% of 2018, followed by 15% for 2019. Based on these estimates, the shares are trading at a 2019 P/E of 12.6, which looks to me to be too cheap considering CRH’s historical growth and income potential. The shares currently support a dividend yield of 2.6%.========== ========== ========== ========== ========== ========== ========== =======I agree with the tipster the stock looks very cheap given EPS growth going forward.<b>Analysts have pencilled in earnings per share growth of 24% of 2018, followed by 15% for 2019</b>Never mind an income stock those figures equate to a ZULU stock under the late Jim Slaters formula.[link]
II Editor
13 Apr 2018
NEW ARTICLE: Our Winter Portfolios still ahead as strategy nears end "There's no getting away from it, despite a promising start March ended up being another grim month for stockmarkets. Leading UK indices dived to levels not seen since late 2016 and only managed a partial recovery by month-end.That's clearly not ..."[link]
valeite
23 Oct 2017
We Won shareholders will note that Ash Grove have ok'd our the takeover .good news I believe
II Editor
09 Nov 2016
NEW ARTICLE: It's Trump! So how come FTSE 100 hasn't crashed? "It happened. It actually happened. Donald Trump is the 45th president of the United States of America. However wrong that sounds, it's a reality, and both the world and financial markets had better get used to it. But early predictions of a ..."[link]
Wexboy
02 Jun 2016
TGISVP - CRH 2016 – The Great Irish Share Valuation Project (Part II):Company: CRH (CRH:ID)Last TGISVP Post: Here Market Cap: EUR 22,579 MPrice: EUR 27.40When Albert Manifold kicked off as CEO, it certainly looked like he was planning to right-size a rather stretched balance sheet (I even wondered whether he’d launch a rights issue). But it’s always hugely tempting for a new CEO (esp. the CEO of an Irish corporate icon like CRH), to make his mark as an empire-builder, so that resolve didn’t last long… Despite announcing a €1.5-2.0 billion multi-year disposal programme in late-2014, 2015 proved to be the year for mega-acquisitions – totaling almost €8 billion, primarily the Lafarge-Holcim & C.R. Laurence Co acquisitions. [OK, Manifold did a placing in the end, but only to fund about 25% of the LH deal].While underlying organic growth’s now progressing at a very healthy clip (primarily driven by renewed US momentum), we haven’t reached a point where it’s easy to determine an appropriate P/E multiple – therefore, we’ll use a similar approach to my previous write-up. Noting CRH’s two big acquisitions closed in H2-2015, first we need to calculate a post-acquisition revenue run-rate: LH revenue’s €5.1 billion & the deal closed end-July, so that’s a €3.0 billion revenue bump for FY-2016. And CRL revenue’s $570 million & it closed end-Aug – an additional $380 million revenue bump.CRH’s FY-2015 EBIT margin was 5.6%, which compares to a peak 9.9% margin (back in 2007) – so relying on the company’s actual Op FCF margin (of 8.3%) seems appropriate here for valuation purposes & deserves a 0.75 P/S multiple. [Which seems fair for the incremental acquisition revenue also – LH & CRL earn much higher EBITDA margins than CRH, but since CRH’s Op FCF margin’s about 50% higher than its EBIT margin, it seems unwise to specifically adjust margin higher for these acquisitions]. And looking at average FY-2015 debt levels vs. year-end debt of €9.2 billion vs. underlying net interest costs, I estimate FY-2016 net interest cost will be around €366 million (vs. a prior €295 million), which is just over 16% of Op FCF – so a debt adjustment no longer seems necessary, bearing in mind CRH also has €2.5 billion cash on hand (also provides cover for a €0.6 billion pension deficit). [OK, props to Manifold…he’s bloody well cashing his way out of a stretched balance sheet!]
EUR 23.6 B Rev + 3.0 B LH + $0.4 B CRL / 1.1115 EUR/USD) * 0.75 P/S / 824 M Shares = EUR 24.53CRH looks marginally over-valued at this point. But noting the underlying momentum of its US business, and likely cost savings to come from its two major acquisitions, we should hopefully see it grow into its current market cap over the next year. But investors should also be mindful of potential integration and/or (renewed) economic risks here, which could prove challenging for a company that’s relatively leveraged at this point.Price Target: EUR 24.53Upside/(Downside): (10)%—For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog.
valeite
06 Nov 2015
USA H ighway act seems the yanks are going to do a spend on their highways over the next 6 years.......this is good because CRH are the largest supplier of raw materials (i did'n't know that)
II Editor
30 Oct 2015
NEW ARTICLE: Winter Portfolio 2015 - winners revealed "Following the success last year of the first pair of seasonal portfolios, Interactive Investor confirmed last week it would launch two new 2015-16 winter portfolios, the constituents of which would have delivered significant double-digit growth ..."[link]
albent
08 Apr 2015
CRH valuation CRH (LSE:CRH): [link] infographic has some good data.
valeite
10 Feb 2015
broker target numis says new target price £19.2
II Editor
02 Feb 2015
NEW ARTICLE: Big reaction to massive CRH acquisition "The acquisition of €6.5 billion worth of assets from Lafarge and Holcim will position LSE:CRH:CRH third in the global building materials market. It also gives the Irish cement company exposure to both emerging and developed markets. With the ..."[link]
