US Federal Funding And Eco Materials Will Fuel Expansion

Key Takeaways

• Investment in sustainable materials and automation is driving profitability, operational efficiencies, and positions CRH for significant growth in eco-friendly construction markets.
  
• Diversified portfolio and strong presence in high-growth sectors enable CRH to secure premium projects, enhancing resilience, pricing power, and stable recurring revenues.
  
• Heavy reliance on public infrastructure funding, acquisitive growth, and core materials exposes CRH to political, integration, regulatory, and economic downturn risks impacting margins and growth.

Catalysts

Provides building materials solutions in Ireland, the United States, the United Kingdom, rest of Europe, and internationally.

• The ongoing rollout of U.S. federal infrastructure funding (less than 40% of the IIJA highway funds have been spent) and an encouraging outlook for the next highway bill create a substantial, multi-year runway for demand in CRH's core public infrastructure segments, offering the prospect for sustained revenue growth and backlog visibility.
  
• Acceleration in sustainable construction and decarbonization is catalyzing large investments into eco-friendly materials-exemplified by the Eco Material Technologies acquisition-uniquely positioning CRH to capture higher-margin business from the rapidly expanding supplementary cementitious materials market, benefiting both top-line growth and net margins amid market shifts toward green building.
  
• Strategic reinvestment into production automation, operational efficiencies, and capacity expansions at key aggregate and cement facilities is enabling CRH to achieve consecutive margin expansion (Q2 margins up 70bps YoY), increasing overall profitability and underpinning robust earnings growth.
  
• The company's disciplined portfolio strategy-pursuing value-accretive bolt-ons in high-growth regions and optimizing operations through integration-has strengthened both scale and diversification, reinforcing operating leverage, commercial synergies, and resilience, which supports both margin improvement and earnings stability.
  
• Significant exposure to high-growth verticals such as data centers, energy, water infrastructure, and manufacturing reindustrialization, combined with a leading, fully connected portfolio across the construction value chain, allows CRH to consistently capture premium projects and pricing power, driving recurring revenue streams and expanding EBITDA.

CRH Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming CRH's revenue will grow by 5.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 9.0% today to 11.4% in 3 years time.
• Analysts expect earnings to reach $4.9 billion (and earnings per share of $7.54) by about August 2028, up from $3.3 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $4.2 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.4x on those 2028 earnings, down from 23.4x today. This future PE is lower than the current PE for the GB Basic Materials industry at 22.8x.
• Analysts expect the number of shares outstanding to decline by 1.48% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

CRH Future Earnings Per Share Growth

Risks

• Heavy reliance on publicly funded infrastructure (especially the U.S. IIJA program) creates exposure to political risk or future changes in federal/state funding priorities, which could materially impact long-term revenue visibility and growth if priorities shift or subsequent highway bills reduce allocations.
  
• Rising interest rates and ongoing affordability challenges in U.S. residential construction are delaying the recovery of the housing sector, which remains subdued and may limit topline growth for CRH's building materials in a key end market until at least late 2026.
  
• The company's aggressive acquisitive growth strategy-including the $2.1 billion Eco Material acquisition and numerous bolt-ons-increases execution and integration risks; potential overpayment or failure to realize expected synergies would increase costs, risk earnings volatility, and threaten sustained net margin improvement.
  
• Dependence on cement and aggregates as core product lines exposes CRH to the risk of higher carbon taxes, increased regulatory cost burdens, and competitive pressures from lower-carbon/innovative substitutes, potentially eroding net margins across its portfolio as global decarbonization pressures mount.
  
• While the connected portfolio strategy boosts margin during strong cycles, a high fixed-cost base and global footprint may reduce flexibility to adapt quickly to economic downturns or supply chain shocks (e.g., weather, energy costs, logistics disruptions), risking adverse impacts on both short
• and long-term net income and operating margins.

Valuation

• The analysts have a consensus price target of $117.25 for CRH based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $135.0, and the most bearish reporting a price target of just $90.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $43.2 billion, earnings will come to $4.9 billion, and it would be trading on a PE ratio of 19.4x, assuming you use a discount rate of 8.4%.
  
• Given the current share price of $113.65, the analyst price target of $117.25 is 3.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.