CRH
CRH plc
$84.89
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Fair Value
Trading 0.7% below fair value
You pay
$84.89
Bear
$66.50
Fair
$85.50
Bull
$104.50
Bear
$66.50
-21.7%
$4.75 × 14x
Fair
$85.50
+0.7%
$4.75 × 18x
Bull
$104.50
+23.1%
$4.75 × 22x
Adjust Assumptions
18.0x
4.75$
Key Value Driver
Through-cycle normalized EPS ($4.75)
Implied Market Multiple
17.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (21 analysts)
$127.66
Divergence from AlphaVal
33%
Summary
Using 7-year normalized EPS of $4.75 at a 18x cycle multiple, the base-case value is $85.50 per share. P/TBV cross-check: 6.4x.
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 6.4x 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 $127.66 (from 21 analysts). Our estimate is 33% 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