CRH
CRH plc
$98.59
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 11.7% above fair value
You pay
$98.59
Bear
$64.70
Fair
$88.22
Bull
$111.75
Bear
$64.70
-34.4%
$4.75 × 14x + net cash
Fair
$88.22
-10.5%
$4.75 × 18x + net cash
Bull
$111.75
+13.3%
$4.75 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.75)
Implied Market Multiple
20.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $139.15 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $88.22 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 7.4x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $139.15 (from 20 analysts). Our estimate is 49% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing