As U.S. builders hustle to keep up with a record-breaking infrastructure and manufacturing building boom, Dublin-based CRH, one of the largest construction-material providers and road builders in the U.S., plans this month to transfer its primary stock listing to the New York Stock Exchange.
Shareholders in June approved the Irish company's transition to a primary listing on the New York Stock Exchange. In a move expected to take place "on or around" Sept. 25, CRH will de-list from Euronext Dublin and replace its American depositary shares and receipts with a full-fledged NYSE stock listing.
That change comes with increased U.S. reporting and compliance requirements from the Securities Exchange Commission, including full quarterly earnings reports, rather than the half-year operational updates required as an overseas listing.
The construction materials giant will maintain a standard listing on the London Stock Exchange. But the relisting means it will be dropped from the venerated FTSE 100 LSE benchmark index. And the move represents a second blow to the LSE status, after SoftBank's ARM Holdings opted to launch its highly anticipated initial public offering earlier this month.
Over the past three decades, CRH has consolidated a large share of U.S. cement and aggregates production, driving its U.S. market capitalization above $41 billion. Its nearest publicly traded competitors are Martin Marietta, with a market cap of $26.12 billion, and Vulcan Materials, which weighs in at $27.9 billion.
CRH estimated revenue for the current year is $34.97 billion, FactSet says. Martin Marietta revenue is projected at $6.8 billion. Vulcan has a $7.7 billion target.
CRH derives 75% of its earnings from North America, and says it expects the U.S. "to be a key driver of future growth for CRH due to continued economic expansion, a growing population and significant construction needs."
CRH Surprises Wall Street
In late August, CRH surprised Wall Street with its first-half 2023 financial results. The company reported earnings growing 31% and revenue increasing 8%. Sales in the CRH's U.S. aggregates and road-construction business grew 9% on the back of 15% higher prices for rocks used in concrete and construction.
Meanwhile, CRH revenue from its U.S. building solutions segment grew 21% vs. 2022, benefiting "from increased demand and robust public funding in the telecommunications, water, and energy utility markets."
For the full year, analysts predict a 26% earnings jump t0 $4.39 per share, with sales advancing 7% to $34.96 billion, according to FactSet.
This comes as the U.S. is in the midst of the largest boom in manufacturing facility construction since the 1960s. The semiconductor industry, chemical manufacturing, food-beverage industry and transportation equipment sector are spending many billions on new factories in the wake of the CHIPS Act, the Inflation Reduction Act (IRA) and the $1 trillion Infrastructure Investment and Jobs Act under President Joe Biden.
Capital flowing to projects for new manufacturing facilities continued to increase through July. The Census Bureau announced in early September that year-to-date spending totaled $201 billion, at a seasonally adjusted rate.
Building/Cement Stocks Soar In 2023
The Building-Cement/Concrete/Aggregate industry group ranks 24th out of 197 industries tracked by IBD. Collectively, the 12 stocks have gained more than 27% in 2023, outperforming the S&P 500 index's 15% increase.
CRH stock has run well ahead of the group, with a 38% year-to-date gain through Tuesday. Vulcan and Martin Marietta jumped 19% and 25%, respectively.
CRH shares carry a dividend which currently yields 2.3%. Vulcan's dividend yields 0.8%. Martin Marietta yields 0.7%.
Just how CRH shares might behave in initial trading is far from clear. Martin Marietta stock closed at 420.91 on Wednesday. Vulcan ended at 209.55, while CRH closed at 54.99.
Martin Marietta and Vulcan carry much higher price to earnings ratios, with MLM at 27% and VMC at 34%, vs. a PE of 13 for CRH.
On Aug. 22, Citi analyst Anthony Pettinari assumed coverage of CRH with a buy rating ahead the company's planned re-listing on the New York Stock Exchange. Pettinari told investors there could be upside on a potential re-rating as U.S. investors look for cheaper ways to add exposure to construction and infrastructure plays.
CRH stock has a 92 Composite Rating out of 99. The shares also have a 88 Relative Strength Rating. CRH's EPS Rating is 95 out of 99.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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