DCF Studio

    CRH · NYQ · Basic Materials

    CRH plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 50.84

    Market price

    USD 86.15

    Implied upside

    -41.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 50.84-41.0%
    Exit multiple
    USD 78.37-9.0%
    Market price
    USD 86.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 39.2bnUSD 41.0bnUSD 42.9bnUSD 44.8bnUSD 46.9bn+4.6%
    EBITUSD 5.1bnUSD 5.4bnUSD 5.6bnUSD 5.9bnUSD 6.1bn+4.6%
    NOPATUSD 4.1bnUSD 4.2bnUSD 4.4bnUSD 4.6bnUSD 4.8bn+4.6%
    Add depreciation & amortisationUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bn+4.6%
    Less capital expenditureUSD -2.4bnUSD -2.5bnUSD -2.6bnUSD -2.7bnUSD -2.9bn+4.6%
    Less increase in working capitalUSD -655.6mUSD -685.7mUSD -717.3mUSD -750.2mUSD -784.7m+4.6%
    Free cashflow to firmUSD 3.0bnUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.6bn+4.6%
    Discount factor0.95620.87430.79950.73100.6684-
    Present valueUSD 2.9bnUSD 2.7bnUSD 2.6bnUSD 2.5bnUSD 2.4bn-4.4%
    Present Value Of The ForecastUSD 13.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.133Reported 1.198, pulled toward 1.0 (Blume)
    Cost of equity11.23%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 57.3bn74.4% of capital
    Total debtUSD 19.7bn25.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.37%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 50.84

    74% of EV

    Forecast FCFF, final year
    USD 3.6bn
    Capex at depreciation, working capital in reinvestment
    USD 4.8bn
    Less reinvestment at g/ROIC (23.8% of NOPAT)
    USD -1.2bn
    Capitalised
    USD 3.7bn
    ROIC (reported)
    10.5%
    Terminal value, undiscounted
    USD 55.2bn
    Terminal value, discounted
    USD 36.9bn
    Enterprise value
    USD 50.0bn
    Less net debt
    USD 15.6bn
    Equity value
    USD 34.4bn

    Exit at 9.8x EBITDA

    Value per shareUSD 78.37

    81% of EV

    Terminal value, undiscounted
    USD 83.1bn
    Terminal value, discounted
    USD 55.5bn
    Enterprise value
    USD 68.7bn
    Less net debt
    USD 15.6bn
    Equity value
    USD 53.1bn

    Spread between methods: 43%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.37%74.4377.3380.7884.9590.14
    8.37%60.0461.5463.2565.2467.58
    9.37%49.3350.0550.8451.7152.70
    10.37%41.0541.3141.5841.8642.14
    11.37%34.9635.1535.3435.5435.73

    Outlined: this model. Green text: above today's price of 86.15. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year4.6%17.1%+12.5pp
    EBIT margin13.1%18.8%+5.7pp
    Discount rate9.4%7.1%-2.2pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.