On Friday, Stifel, a financial services firm, increased the price target for CRH (LON:CRH) Plc (NYSE:CRH:ID) (NYSE: CRH), a leading global building materials company, to GBP 87.50 from GBP 82.00. The firm has decided to maintain a Hold rating on the stock.
The adjustment of the price target comes after Stifel's analysis indicated a positive outlook for CRH's earnings before interest, taxes, depreciation, and amortization (EBITDA). The firm has increased its EBITDA projections by 4% for 2024 and 2025. This revision includes the impact of the first-time consolidation of Adbri, which is expected to contribute an additional 1% and 2% to the EBITDA in 2024 and 2025, respectively.
According to Stifel, CRH's EBITDA for 2024 is now estimated at $6,933 million, aligning closely with the Visible Alpha consensus of $6,927 million. The analysts noted that CRH performed well in the last quarter, showcasing resilience in its North American and European volume sales despite a general market downturn. The company's pricing strength was also highlighted, although signs indicate that this trend may be starting to slow.
Furthermore, Stifel pointed out that the prices of US aggregates have reached a 109-year high in real terms, with a significant increase since the Global Financial Crisis. However, the firm has revised its free cash flow (FCF) estimates downward by 6% and 9% for 2024 and 2025, respectively, due to anticipated higher capital expenditures and cash interest.
Lastly, Stifel's revised net debt calculations for CRH now take into account the acquisition of Adbri and the new dividend payment pattern following the company's US relisting. The firm's updated financial outlook reflects a comprehensive assessment of CRH's current position and expected performance in the coming years.
InvestingPro Insights
Following Stifel's recent price target update for CRH Plc, InvestingPro data and tips offer additional insights into the company's financial health and market position. With a market capitalization of $59.55 billion and a P/E ratio that stands at 17.92, CRH shows signs of a stable investment. The company's adjusted P/E ratio for the last twelve months as of Q2 2024 is slightly lower at 17.14, suggesting a reasonable valuation relative to its earnings.
An InvestingPro Tip highlights that CRH has been aggressively buying back shares, which can be an indicator of management's confidence in the company's future and often leads to a positive market perception. Additionally, the company has raised its dividend for four consecutive years, reflecting a commitment to providing shareholder returns. This, coupled with a dividend yield of 1.43%, could be attractive to income-focused investors.
InvestingPro also notes that CRH is trading at a price that is 95.21% of its 52-week high, and the company has experienced a high return over the last year, with a year-to-date price total return of 26.48%. These metrics underscore the company's strong performance and may bolster investor confidence.
For investors seeking more detailed analysis and additional InvestingPro Tips, the platform offers a comprehensive list, including 10 more tips for CRH, accessible through the dedicated InvestingPro page for the company.
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