The CRH (LSE: CRH) share price hit all-time-highs following its results yesterday. Is it now too late for me to buy this FTSE 100 stock, which has already run up nearly 35% in the past year? Let’s find out.
Robust earnings increase
First, a quick look at its results. During the first half of 2021, the building materials specialist’s sales increased by 15% from the same time last year. Its earnings before interest, tax, depreciation and amortisation, more popularly known by the acronym EBITDA, also rose by a significant 25%. Its earnings per share increased even more, by 95%.
It expects its earnings to remain strong in the second half of the year as well, driven by improved demand conditions in both the US and Europe. An overall improvement in the economy is one reason for this. Infrastructure development plans in the US could also hold it in good stead, since more than half its revenues are derived from the US. And a robust housing market could go in its favour too.
Could the CRH share price keep rising?
Higher expected earnings could also technically drive the share price up further. I am not so sure in this case, though. My estimates from the latest numbers show that its price-to-earnings (P/E) is around 55 times, which makes it among the pricier FTSE 100 stocks already.
It is possible that CRH could sustain the current share price. There are some stocks that investors are happy to hold at a premium. But I am less certain that it could continue to rise as fast as it did in the past year. Last year at this time, the world was still in a hugely uncertain place. And it remained so for at least a few months afterwards.
At the time, it was one of the few FTSE 100 companies that was still going relatively strong. Now, however, both performance and prospects have improved for a far larger number of these companies. So, comparatively, CRH’s attractiveness could be less now than it was earlier.
My takeaway for the FTSE 100 stock
If I were looking at capital gains from the stock in the next year or two, I think there are other options around. There are still some travel stocks, for instance, that are trading at prices way below their pre-pandemic levels. These could be the next set of big gainers. CRH also has a small dividend yield of 2.1%, which means that there are better stocks around to buy to earn a passive income as well.
However, if I were looking at buying a stock for the really long term, I think CRH could be a good one. It is a financially strong, geographically diversified company, and a stock that has made gains over time. So far, I have no reason to believe it will be otherwise in the future. It is still a good long-term buy for me, in my view.
Manika Premsingh has no position in any of the shares mentioned. 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.