The U.S. infrastructure sector has experienced remarkable growth in recent years, thanks largely to the $1 trillion Infrastructure Investment & Jobs Act, along with the CHIPS Act and the Inflation Reduction Act (IRA) introduced by the Biden-Harris administration. These legislative measures have provided a strong foundation for expansion.
CRH plc (CRH), with its extensive international operations and a robust global strategy, is well-positioned to benefit from this surge in infrastructure spending. The company stands at the forefront of the industry, capitalizing on the growing demand for infrastructure development across multiple regions and sectors.
The Infrastructure Investment & Jobs Act alone allocates significant funding, including $47 billion for roads and bridges, $25 billion for airport projects, and $17 billion for ports, among other potential allocations. Analysts anticipate that funding from the infrastructure bill will begin flowing into projects around 2025 and is expected to continue through 2028.
However, the Trump administration has threatened to cut back on some of the infrastructure funding. Despite potential shifts in domestic policy, such as those hinted at by President-elect Donald Trump regarding infrastructure spending, CRH maintains a strong position.
The company has demonstrated impressive growth, with its stock rising 25.5% in the past six months and an incredible 66.6% over the last year, closing at $102.87 in the latest trading session. With such momentum, CRH appears poised to continue thriving.
Let’s dive deeper into the factors that could shape CRH’s performance moving forward.
Recent Developments
On November 1, CRH announced a significant milestone with the completion of a new wind farm designed to supply renewable electricity to its Medgidia Cement Plant in Romania. This wind farm is a pioneering project, being the first in Romania to power a cement plant exclusively, marking a major step in the company’s sustainability efforts.
This move not only enhances the company's reputation but also strengthens its market position by attracting environmentally aware consumers and investors, fueling long-term growth.
In addition to this renewable energy initiative, CRH’s fiscal 2024 third-quarter report highlighted a robust growth trajectory. The company completed 12 acquisitions totaling $1.4 billion during the three months which ended September 30, 2024, significantly higher than the $0.4 billion spent during the same period in 2023.
These acquisitions, spread across Americas Materials Solutions, Americas Building Solutions, and Europe Materials Solutions, could further expand CRH’s market presence.
Sound Historical Growth
Over the past three years, CRH’s revenue has grown at a CAGR of 9.2%. Meanwhile, its EBITDA rose at a CAGR of 11.4%. Plus, the company’s operation income (EBIT) and total assets increased at CAGRs of 16.6% and 4.7%, respectively.
Furthermore, during the same time frame, the company’s net income and EPS grew at respective CAGRs of 19.7% and 24.6%. The sustained performance highlights the company’s strong growth trajectory over the last few years.
Strong Financials
For the fiscal third quarter that ended September 30, 2024, CRH’s total revenues increased 3.8% year-over-year to $10.52 billion. Its operating income grew 9.8% from the year-ago value to $1.96 billion. Furthermore, the company’s adjusted EBITDA increased 12.1% year-over-year to $2.45 billion.
Additionally, its net income and EPS attributable to CRH rose 5.4% and 9.4% from the prior year’s quarter to $1.38 billion and $1.97, respectively. As of September 30, 2024, CRH’s total assets amounted to $51.22 billion, compared to $47.63 billion on September 30, 2024.
Favorable Analyst Estimates
Analysts predict CRH’s revenue for the fiscal year ending December 2024 to rise marginally year-over-year to $35.10 billion. Its EPS for the ongoing fiscal year is also expected to grow 16.5% from the previous year to $5.42.
Looking further ahead to the next fiscal year ending in December 2025, CRH is projected to see additional growth, with revenue and EPS forecasted to rise by 6.7% and 10.6% from the prior year to reach $37.45 billion and $5.99, respectively.
High Profitability
CRH’s trailing-12-month gross profit margin of 35.30% is 21.7% higher than the industry average of 29%. Its trailing-12-month asset turnover ratio stands at 0.74x, 12.5% higher than the industry average of 0.66x.
Additionally, CRH’s trailing-12-month net income margin of 9.86% outperforms the industry average of 5.02% by 96.5%. Moreover, the company boasts a trailing-12-month EBITDA margin of 18.44%, which is 11.8% above the sector average of 16.50%.
POWR Ratings Reflects Optimism
CRH’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
CRH has a B grade for Quality, which is in sync with its impressive profitability metrics that surpass the industry average. Interestingly, the stock also scores a B for Momentum, as it trades above its 50-day and 200-day moving averages of $94.48 and $84.51, respectively.
Within the B-rated Industrial - Building Materials industry, CRH is ranked #10 out of 43 stocks. Beyond what is stated above, we have also given CRH grades for Growth, Value, Sentiment, and Stability. Get all CRH ratings here.
Bottom Line
CRH holds a dominant position in the infrastructure industry, thanks to its expansive global portfolio. This diverse reach could serve as a buffer against potential domestic policy shifts, allowing the company to maintain its strong position and continue generating profits for its investors.
Plus, with its high profitability, ongoing momentum, and strategic positioning, CRH presents itself as an attractive investment opportunity for those looking to capitalize on the growth of the infrastructure sector.
How Does CRH plc (CRH) Stack Up Against Its Peers?
Although CRH’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who currently exhibit even stronger POWR Ratings. So, consider these three A (Strong Buy) or B-rated (Buy) stocks from the Industrial - Building Materials industry:
Daikin Industries Ltd. ADR (DKILY)
Griffon Corporation (GFF)
Perma-Pipe International Holdings Inc. (PPIH)
To explore more A or B-rated Industrial - Building materials stocks, click here.
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CRH shares rose $0.63 (+0.61%) in premarket trading Wednesday. Year-to-date, CRH has gained 50.53%, versus a 27.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
Could CRH's Global Reach Shield It from Domestic Policy Shifts? StockNews.com
