Building materials supplier CRH (LSE: CRH) is the FTSE 100’s strongest performer on Thursday, rising 2% on the day to £38.50 per share.
CRH has risen today after announcing blowout sales growth during the first half of the year. The UK share is now trading just shy of recent record highs having risen 34% in value over the past 12 months. But despite these gains I think CRH still offers stunning value for money.
Earnings rocket 25%
In today’s update CRH said that sales shot 15% higher in the six months to June, to $14bn. This in turn propelled earnings before interest, tax, depreciation, and amortisation (or EBITDA) to $2bn, up 25% from a year earlier. Revenues on a like-for-like basis meanwhile were up 10% year-on-year.
CRH’s bottom line also benefitted from a significant rise in its EBITDA margin. This rose 120 basis points from the same 2020 period to 14.2%, with margins rising across all three main divisions. Meanwhile operating cash flow rose a mighty 55% to $1.6bn year-on-year.
Record cash generation at the FTSE 100 firm encouraged it to raise the interim dividend 4.5%, too, to 23 US cents per share.
Growth was strongest at CRH’s Europe Materials business in the first half. Like-for-like sales here jumped 17% thanks to “strong volume growth” versus the same Covid-19 hit period in 2020 as well as “good price momentum in key markets.”
Like-for-like sales at CRH’s Building Products arm rose 8% from a year earlier, thanks in part to “strong residential repair, maintenance and improvement (RMI) activity in North America.” And corresponding sales at the Americas Materials division edged 3% higher in the period. This was due to “improved volumes of aggregates, cement and readymixed concrete [and] price progress across all lines of business,” the FTSE 100 company said.
Chief executive Albert Manifold commented that “based on current trading conditions and the positive momentum that we see across our markets, we expect second-half group EBITDA to be ahead of a record prior year.”
A FTSE 100 share I’d buy again!
I bought CRH shares earlier this year to ride the economic recovery. And so far I haven’t been disappointed. I think it will continue to impress too as conditions in its key construction markets steadily improve and massive infrastructure spending in the US boosts demand for its products.
Today’s release gave me more reason to be excited by CRH in the long term, too. Further exceptional cash generation gives the FTSE 100 more firepower with which to make profits-boosting acquisitions. The firm has spent $1.1bn on M&A and capital expenditure so far in 2021. And it said today that “our acquisition pipeline remains strong.”
Rising Covid-19 infection rates across the globe pose a threat to CRH’s recovery. But I believe this scenario is baked into the company’s cheap share price (it trades on a forward price-to-earnings growth (PEG) ratio of just 0.3). I already own this FTSE 100 stock in my Stocks and Shares ISA and am thinking of buying some more at current prices.
Royston Wild owns shares of CRH. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.