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CRH

LSE:CRH
Snowflake Description

Proven track record and fair value.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
CRH
LSE
€25B
Market Cap
  1. Home
  2. GB
  3. Materials
2018/01/19
Company description

CRH plc, through its subsidiaries, manufactures and distributes building materials. More info.


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  • CRH's last earnings update was 203 days ago.
SHARE PRICE
3 Month History
CRH
Industry
5yr Volatility vs Market

Value

 Is CRH undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of CRH to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price CRH is available for.
Intrinsic value
28%
Share price is £26.24 vs Future cash flow value of £36.51
Current Discount Checks
For CRH to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • CRH's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • CRH's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for CRH's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are CRH's earnings available for a low price, and how does this compare to other companies in the same industry?
  • CRH is good value based on earnings compared to the GB Basic Materials industry average.
  • CRH is overvalued based on earnings compared to the GB market.
Price based on expected Growth
Does CRH's expected growth come at a high price?
  • CRH is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on CRH's assets?
  • CRH is good value based on assets compared to the GB Basic Materials industry average.
X
Value checks
We assess CRH's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Basic Materials industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Basic Materials industry average (and greater than 0)? (1 check)
  5. CRH has a total score of 3/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (10.8%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for CRH is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
€8,143

Terminal Value

Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = €2,652 × (1 + 1.49%) ÷ (8.3% – 1.49%)

Terminal value based on the Perpetuity Method where growth (g) = 1.49%:
€39,540

Present value of terminal value:
€26,542

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
€34,685 = €8,143 + €26,542

Value = Total value / Shares Outstanding (€34,685 / 837)

Discount to Share Price

Value per share (EUR): €41.45

Exchange rate EUR/GBP = 0.881

Value per share (GBP): £36.51

Current discount (share price of £26.24): 28.12%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.3% = 1.49% + (0.8 * 8.51%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (€24,931,331,954).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.751 = 0.616 (1 + (1- 35%) (33.71%))

Levered Beta used in calculation = 0.8



Equivalent number of shares

If the companies market cap is in a different currency to that of the listing the equivalent number of shares outstanding must be calculated.

Market Cap (EUR): €24,931,331,954

Exchange rate EUR/GBP = 1.135

Market Cap (GBP): £21,957,282,068

Equivalent shares outstanding: £21,957,282,068 / £26.240000 = £837



Assumptions
  1. The risk free rate of 1.49% is from the 10 year government bond rate in GBP.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (8.51%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is CRH expected to perform in the next 1 to 3 years based on estimates from 25 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
14%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is CRH expected to grow at an attractive rate?
  • CRH's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • CRH's earnings growth is expected to exceed the GB market average.
  • CRH's revenue growth is positive but not above the GB market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • CRH's earnings are expected to grow by 14% yearly, however this is not considered high growth (20% yearly).
  • CRH's revenue is expected to grow by 2.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • CRH is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be below the current GB Basic Materials industry average.
  • An improvement in CRH's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess CRH's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the GB market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the GB market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
CRH has a total score of 2/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has CRH performed over the past 5 years?

  • CRH's last earnings update was 203 days ago.
The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare CRH's growth in the last year to its industry (Basic Materials).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • CRH's year on year earnings growth rate has been positive on average over the past 5 years.
  • CRH's 1 year earnings growth exceeds its 5 year annual average (38.7% vs 18.6%)
  • CRH's earnings growth has exceeded the GB Basic Materials industry average in the past year (38.7% vs 34%).
Earnings and Revenue History
CRH's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • CRH performed worse than the GB Basic Materials industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has improved significantly over 3 years.
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Past performance checks
We assess CRH's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Basic Materials industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
CRH has a total score of 4/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is CRH's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up CRH's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • CRH is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • CRH's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of CRH's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 1.2x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • CRH's level of debt (60.4% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (50.3% vs 60.4% today).
  • Total debt is well covered by annual operating cash flow (26.4%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 6.4x coverage).
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Financial health checks
We assess CRH's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. CRH has a total score of 3/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is CRH's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
2.2%
Current annual income from CRH dividends. Estimated to be 2.48% next year.
If you bought £2,000 of CRH shares you are expected to receive £44 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.3%).
  • Paying below markets top dividend payers (3.98%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of CRH's earnings are paid to the shareholders as a dividend.
  • Dividends paid are well covered by net profit (2.4x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (3.1x coverage).
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Income/ dividend checks
We assess CRH's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can CRH afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. CRH has a total score of 3/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of CRH's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Albert Manifold, image provided by Google.
Albert Manifold
COMPENSATION €9,983,000
AGE 54
TENURE AS CEO 4 years
CEO Bio

Mr. Albert Jude Manifold, FCPA, MBA, MBS, has been Chief Executive Officer at CRH Plc since January 01, 2014. Mr. Manifold has been an Executive Director of CRH Plc since January 01, 2009. He served as Managing Director of CRH Europe Holding B.V. since 2007. He served as the Chief Operating Officer of CRH Plc from January 01, 2009 to December 31, 2013 and Group Development Director since 2005. He joined CRH in 1998. While at CRH, he has held a variety of senior positions, including Finance Director of the Europe Materials Division and Managing Director of Europe Materials. Prior to joining CRH, he was Chief Operating Officer with a private equity group. He served as a Director of Secil - Companhia Geral de Cal e Cimento, S.A. He holds FCPA, MBA and MBS.

CEO Compensation
  • Albert's compensation has increased by more than 20% in the past year.
  • Albert's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the CRH management team in years:

5.5
Average Tenure
58
Average Age
  • The average tenure for the CRH management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

Albert Manifold

TITLE
Chief Executive Officer and Executive Director
COMPENSATION
€10M
AGE
54
TENURE
4 yrs

Finbarr Murphy

TITLE
Finance Director and Executive Director
COMPENSATION
€2M
AGE
48
TENURE
2 yrs

Mark Towe

TITLE
Chairman of CRH Americas and Chief Executive Officer of Oldcastle
COMPENSATION
€7M
AGE
67
TENURE
9.5 yrs

Frank Heisterkamp

TITLE
Head of Investor Relations

Noel O'Mahony

TITLE
Head of Group Strategy & Development and Senior Vice President of Europe South East & Brazil

Rossa McCann

TITLE
Head of Group Finance and Group Treasurer

Henry Morris

TITLE
MD of Materials - Europe and Regional Director for Switzerland Finland & The Baltic Region
AGE
63
TENURE
9 yrs

Mark Schack

TITLE
Executive Vice President of Talent Management

Rick Mergens

TITLE
Executive Vice President of Group Performance
TENURE
3.2 yrs

Scott Parson

TITLE
President of Mountain West Division and Senior Vice President of Americas Materials West
Board of Directors Tenure

Average tenure and age of the CRH board of directors in years:

3.9
Average Tenure
60
Average Age
  • The tenure for the CRH board of directors is about average.
Board of Directors

Nicky Hartery

TITLE
Non-Executive Chairman
COMPENSATION
€597K
AGE
65
TENURE
5.7 yrs

Albert Manifold

TITLE
Chief Executive Officer and Executive Director
COMPENSATION
€10M
AGE
54
TENURE
9 yrs

Finbarr Murphy

TITLE
Finance Director and Executive Director
COMPENSATION
€2M
AGE
48
TENURE
2 yrs

Mark Towe

TITLE
Chairman of CRH Americas and Chief Executive Officer of Oldcastle
COMPENSATION
€7M
AGE
67
TENURE
2 yrs

Don McGovern

TITLE
Senior Independent Director
COMPENSATION
€174K
AGE
66
TENURE
3 yrs

Henderikus Rottinghuis

TITLE
Non-Executive Director
COMPENSATION
€120K
AGE
61
TENURE
3.9 yrs

Pat Kennedy

TITLE
Non-Executive Director
COMPENSATION
€120K
AGE
63
TENURE
3 yrs

Heather McSharry

TITLE
Non-Executive Director
COMPENSATION
€120K
AGE
56
TENURE
5.9 yrs

Lucinda Riches

TITLE
Non-Executive Director
COMPENSATION
€120K
AGE
55
TENURE
2.8 yrs

Bill Teuber

TITLE
Non-Executive Director
COMPENSATION
€112K
AGE
65
TENURE
1.8 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
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Management checks
We assess CRH's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. CRH has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

External News
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Simply Wall St News

Company Info

Map
Description

CRH plc, through its subsidiaries, manufactures and distributes building materials. The company operates through seven segments: Europe Heavyside, Europe Lightside, Europe Distribution, Americas Materials, Americas Products, Americas Distribution, and Asia. The company manufactures and supplies cement, aggregates, ready-mixed and precast concrete, concrete landscaping, and asphalt products; and construction accessories, shutters and awnings, and fencing and composite access chambers. It also produces and sells concrete masonry and hardscapes, packaged lawn and garden products, packaged cement mixes, construction accessories, and glass and aluminum glazing systems, as well as fencing, utility, drainage, and structural precast products; and provides asphalt paving services. In addition, the company is involved in supplying exterior products, such as roofing and siding, as well as interior products comprising gypsum wallboard, metal studs, and acoustical ceiling systems; and selling a range of bricks, cement, sanitary, heating, plumbing, and other building products through its do-it-yourself stores to the general public and small and medium-sized builders to the general public and small and medium-sized builders. It operates primarily in Western Europe and North America, as well as in Eastern Europe, South America, the Philippines, China, and India. CRH plc was founded in 1936 and is headquartered in Dublin, Ireland.

Details
Name: CRH plc
CRH
Exchange: LSE
Founded: 1936
€21,957,282,068
838,591,724
Website: http://www.crh.com
Address: CRH plc
Belgard Castle,
Clondalkin,
Dublin,
Co. Dublin, 22,
Ireland
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
ISE CRG Ordinary Shares Irish Stock Exchange IE EUR 02. Jan 1992
OTCPK CRHC.F Ordinary Shares Pink Sheets LLC US USD 02. Jan 1992
DB CRG Ordinary Shares Deutsche Boerse AG DE EUR 02. Jan 1992
LSE CRH Ordinary Shares London Stock Exchange GB GBP 02. Jan 1992
BATS-CHIXE CRGI Ordinary Shares BATS 'Chi-X Europe' GB EUR 02. Jan 1992
BATS-CHIXE CRHL Ordinary Shares BATS 'Chi-X Europe' GB GBP 02. Jan 1992
NYSE CRH SPON ADR EA REPR 1 ORD SHS EUR0.32 New York Stock Exchange US USD 10. Jul 1989
DB XCRA SPON ADR EA REPR 1 ORD SHS EUR0.32 Deutsche Boerse AG DE EUR 10. Jul 1989
BMV CRH N SPON ADR EA REPR 1 ORD SHS EUR0.32 Bolsa Mexicana de Valores MX MXN 10. Jul 1989
Number of employees
Current staff
Staff numbers
87,000
CRH employees.
Industry
Construction Materials
Materials
Company Analysis and Financial Data Status
Area Date
Company Analysis updated: 2018/01/19
Last estimates confirmation: 2018/01/19
Last earnings update: 2017/06/30
Last annual earnings update: 2016/12/31


All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.