CRH
CRH plc
$100.37
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 14.9% above fair value
You pay
$100.37
Bear
$64.05
Fair
$87.34
Bull
$110.63
Bear
$64.05
-36.2%
$4.75 × 14x + net cash
Fair
$87.34
-13.0%
$4.75 × 18x + net cash
Bull
$110.63
+10.2%
$4.75 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.75)
Implied Market Multiple
21.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $135.60 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $87.34 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 7.6x 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 $135.60 (from 20 analysts). Our estimate is 47% 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