CRH has set new midterm targets, aiming for 7-9% annual revenue growth and an adjusted EBITDA margin of 22-24%. The company is benefiting from US legislation that drives the construction sector forward. However, shares remain overvalued, trading at a 30% premium to the estimated fair value.
Key metrics show CRH’s fair value estimate is GBX 6,700, with a Morningstar rating of two stars and an economic moat rating of narrow. The company has already seen a 300 basis point increase in adjusted EBITDA margin between 2021 and 2025, with management expecting further growth.
Despite this, the analyst remains skeptical, citing limited opportunities for EBITDA margin expansion and cyclical nature of outdoor living and international segments. CRH is trading at 24 times earnings, a premium to its five-year average, but narrowing valuation discount versus US pure-play aggregate producers suggests growing optimism in shares.
Source: https://global.morningstar.com/en-gb/stocks/crh-new-midterm-targets-set-capital-markets-day-highlight-bright-us-construction-outlook