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Investing.com -- J.P. Morgan has initiated coverage on CRH’s London-listed shares with an “overweight” rating and a December 2026 price target of 9,645 GBp, implying a forward 11.4× EV/EBITDA multiple.
The brokerage described CRH as “largest materials player in North America and Europe with a high degree of diversification and downstream integration,” adding that its vertical model enables it to “capture a larger share of project revenue, driving greater customer loyalty and improved cash generation.”
CRH operates across North America, Europe, and Australia, with about 75% of EBITDA derived from North America.
The company’s business is split across essential materials, road solutions, and outdoor living products, which collectively provide “a high degree of geographical and end-market diversification.”
Exposure is spread across 35% infrastructure, 35% residential, and 30% nonresidential markets. J.P. Morgan said this balance helps offset regional or sectoral slowdowns.
Analysts led by Elodie Rall wrote that CRH has “proven itself to be an effective active manager of its portfolio of operations,” having acquired approximately $18 billion of assets between 2014 and 2022 at an average multiple of ~8× EV/EBITDA while divesting roughly $12 billion of assets at about 11×.
Over the same period, CRH generated “5% growth in net scope EBITDA contribution per year on average from FY22-FY25e,” alongside steady organic EBITDA gains.
The brokerage highlighted CRH’s cash generation and shareholder returns, noting that “cash returned to shareholders plus organic and inorganic EBITDA growth has been at ~20% over the past three years, with ~3pp from dividends, 5pp from buybacks, 5pp from net scope and 9pp from organic growth.”
J.P. Morgan described CRH as a “growth compounder with room for further margin enhancement.” EBITDA margins rose from 17.7% in FY23 to 19.5% in FY24 and are forecast to reach 20.4% in FY25 and 21% in FY27.
In valuation terms, the price target is derived from a sum-of-the-parts (SoP) model and discounted cash flow (DCF) analysis, using a 7.5% WACC with a 0.85 beta, 4% risk-free rate, 5% equity risk premium, and 3.8% cost of debt.
J.P. Morgan estimates consolidated revenue will rise from $34,949 million in FY23 to $40,779 million in FY27, with EBITDA climbing from $5,819 million to $8,551 million.
Earnings per share are projected to grow from $4.51 to $6.65 during the same period.
The brokerage noted that CRH’s “large cash generation power has allowed CRH to aggressively reinvest via acquisitions and growth capex while returning large amounts of cash to investors.”
It also pointed to potential re-rating catalysts, including continued double-digit EBITDA growth, inclusion in the S&P 500, and the company’s $40 billion in expected financial capacity for FY26-FY30 to fund organic and inorganic growth, buybacks, and dividends.
Key risks include a “prolonged downturn of residential markets in the US,” potential “M&A disappointments,” a slower-than-expected European recovery, and “a strengthening US dollar” that could weigh on international results.