The Bull Rankings scorecard — our quality-growth score is 56.8 / 100, built from three pillars scored 0–100: Quality 65, Growth 50, Value 57 (valuation is judged against sector peers). At today's price, our reverse-DCF read says the market is implicitly betting on free-cash-flow growth of about 15% a year next year, fading to 4% a year by year ten — a gauge of how much optimism is already in the stock.
The thesis
CRH’s current price of $82.65 sits at a P/E of 14.6, comfortably below the Basic Materials median of roughly 40th percentile. That alone flags the stock as a value play, but the real engine is our quality‑growth score of 56.8/100. The score is anchored by a Quality pillar of 65, the highest of the three, while Growth lags at 50 and Value at 57. A Quality of 65 tells us that CRH’s earnings are stable, its capital structure is healthy (debt‑to‑equity of 0.78), and its free‑cash‑flow of $2.7 b is robust. The modest Growth score reflects the 6.3 % revenue growth over the trailing twelve months, a figure that is solid but not explosive. In short, the thesis is that CRH is a solid, cash‑generating builder of infrastructure that is currently undervalued relative to its peers, and that the market has priced in a higher growth rate than the business has just delivered.
What the business actually is
CRH’s revenue engine is built around three geographic segments: Americas Materials Solutions, Americas Building Solutions, and International Solutions. The company supplies aggregates, cementitious materials, and ready‑mixed concrete to the construction and maintenance of public infrastructure, commercial and residential buildings, and transportation networks. Its product mix includes paving and construction services, as well as outdoor living spaces. The Americas Building Solutions segment, which delivers building materials for residential and commercial projects, is the most growth‑laden, feeding the company’s 6.3 % revenue expansion.
Why it can (or can't) keep compounding
The moat is two‑fold. First, CRH’s profit margin of 9.9 % is higher than many of its peers, reflecting efficient operations and a diversified product mix that buffers against commodity swings. Second, the company’s return on equity of 16 % signals that it turns capital into earnings at a rate that competitors find hard to match. These metrics are bolstered by the model signal “Raising its dividend”, which indicates that management believes cash flow will remain strong enough to sustain and grow shareholder payouts. The combination of stable margins, solid ROE, and a dividend‑raising trajectory creates a durable competitive advantage that is not easily replicated by smaller players lacking the same scale.
The valuation question
That starting rate is higher than the trailing revenue growth of 6.3 %. In other words, the market is already pricing in a significant upside to CRH’s earnings trajectory. The PEG ratio of 1.47 confirms that the price is not over‑valued relative to growth expectations; it sits comfortably below the 2‑point threshold that often signals overpricing. The P/E of 14.6 versus the sector median suggests that the market has not yet fully absorbed the company’s quality and cash‑flow profile. Thus, the valuation is conservative relative to the optimism embedded in the implied growth assumptions.
The bear case
The weakest pillar in the quality‑growth score is Growth at 50. A 6.3 % revenue rise is modest in a cyclical industry that can swing sharply with construction demand. If the ciclical growth signal turns negative—say, a downturn in public‑infrastructure spending—CRH’s revenue could stall or even contract. A single quarter of flat or declining sales would undermine the 15 % implied growth and erode the dividend‑raising narrative. The debt‑to‑equity ratio of 0.78, while healthy, could become a drag if interest rates climb, squeezing margins and forcing the company to cut dividends or reinvest heavily in debt service.
What would change our mind
- Revenue growth falling below 5 % for two consecutive quarters would invalidate the implied 15 % growth assumption and push the valuation lower.
- Profit margin slipping below 8 % would erode the cost advantage that underpins the 9.9 % margin and the 16 % ROE, weakening the moat.
- Debt‑to‑equity rising above 1.0 would signal financial stress, potentially forcing a dividend cut and damaging investor confidence.
If any of these thresholds are breached, the current thesis would need to be revisited.