CRH PUBLIC LTD CO (CRH) stock intrinsic value fair value estimate & owner earnings analysis

CRH is an Irish-incorporated building materials group that reports in US dollars. It quarries aggregates, makes cement and ready-mix concrete, lays asphalt and paves roads, and sells building products such as precast concrete, pipe, outdoor living and roofing materials. About 61% of 2025 revenue of $37.4bn came from the United States, with the rest from the UK, continental Europe, Australia and Canada. Its core assets are quarries and cement plants that are hard to permit and expensive to replicate, which gives it durable local pricing power, but its volumes rise and fall with road-building, housing and commercial construction. Earnings. We measure owner earnings as operating cash flow, stripped of year-to-year working-capital swings, less the cost of shares issued to employees and less the capital spending needed to keep the existing business running. Because CRH only began reporting on US accounting standards with 2021 figures, we have five comparable years. Spending that matched revenue growth (about 5.9% of each extra dollar of sales) was treated as growth investment; everything else as upkeep. On that basis owner earnings were $2.65bn, $2.70bn, $3.34bn, $2.78bn and $3.24bn from 2021 to 2025, or $3.37, $3.54, $4.58, $4.03 and $4.79 per diluted share. Adding back the interest CRH pays its lenders gives the cash the business itself generates before financing: $3.0bn, $3.0bn, $3.8bn, $3.4bn and $4.0bn. We anchor on the five-year median of about $3.4bn. That window catches only the post-2020 up-cycle, so we do not treat it as a full cycle; the downturn is carried explicitly in the cases below. It is also conservative in one respect: 2025 alone was $4.0bn, and CRH has since bought businesses (Eco Material Technologies for $2.1bn in September 2025, plus 37 smaller deals) whose earnings are barely in the record. Note that 2024 capital spending ran about 1.4 times depreciation, yet because revenue barely grew that year nearly all of it is counted as upkeep, which depresses that year. Previous figures we published used a different earnings definition and are not comparable to these. Growth credited. Owner earnings grew about 17% in 2025. We assume only 1.5% a year in the base case, well below that. The growth we credit is CRH's long-run habit of buying dozens of small local quarries and contractors every year, paid for from its own cash and continued through the 2008-2011 downturn, plus price increases that aggregates producers have historically passed through above inflation. We do not credit the remaining federal highway money from the 2021 Infrastructure Investment and Jobs Act (about half still to be spent according to the company), data-centre and reindustrialisation demand, or the expected growth of Eco Material's supplementary cementitious materials, because none of those is contracted or proven at today's scale; the federal programme also needs reauthorisation after 2026. Acquired supply-agreement intangibles ($789m at Eco Material) amortise and are added back in cash flow, so we hold the base path flat after year 10 rather than letting it compound. Debt. At the end of 2025 CRH owed $17.65bn of loans and bonds plus $0.53bn of finance leases, held $4.1bn of cash, and outside shareholders owned stakes in subsidiaries worth about $1.5bn including redeemable interests, for roughly $15.6bn owed ahead of common shareholders. The debt is mostly fixed-rate with an average maturity of about 9.5 years, and cash interest of $724m on it implies a cost near 4%, below what new borrowing would cost; we credit about $1.1bn of that advantage, leaving about $14.5bn deducted. There is no maturity wall or covenant that drives the outcome, and debt rose by about $4bn in 2025 to fund acquisitions, so continued debt-funded buying is a risk to watch rather than something we model. Bear case: a repeat of the 2008-2011 construction collapse, when CRH's operating profit fell by roughly 40-45% from peak and took about four years to bottom. Business cash flow falls from $3.4bn to about $1.9bn by years 4-5, recovers only to 90% of today's level, and never grows from there. Even at the trough it covers interest about 2.5 times. The business would be worth about $44bn, less $14.5bn owed, leaving about $29.5bn or $44 per share. Base case: business cash flow grows 1.5% a year from the $3.4bn anchor through bolt-on acquisitions and pricing, with an ordinary construction slowdown cutting it about 12% for two years mid-decade, then holds flat for roughly forty more years on the strength of long-lived quarry reserves. The business is worth about $59bn; less $14.5bn owed, about $44.5bn or $66.50 per share. Bull case: the demonstrated pace of acquisition and aggregates pricing continues, giving 3.5% annual growth for ten years, slowing to 1.5% thereafter. The business is worth about $79bn; less $14.5bn owed, about $64.5bn or $96.50 per share. What would make this wrong: a deeper or longer construction downturn than 2008-2011 (especially in US housing and state highway budgets at the same time); acquisitions bought at prices that destroy value, since growth here is purchased rather than organic (organic revenue was roughly flat to slightly down in 2025); and the 2024-2025 step-up in capital spending turning out to be the new upkeep level rather than growth. Margin-of-safety price. We are reasonably confident in the earnings level: five years of cash flow cluster between $3.0bn and $4.0bn before interest, the assets are physical and long-lived, and no customer is concentrated. The worst plausible event is a severe, simultaneous US and European construction slump of the 2008 kind, which CRH has already survived once with a more indebted balance sheet; its hard assets, spread over thousands of local markets, and long-dated fixed debt would carry it through without needing new equity. If we are wrong on the two things most likely to be wrong, the anchor being 10% too high and acquisitions adding nothing, the shares are worth roughly $55-58. The price assumes a three-to-four-year holding period for value to show, and CRH pays a dividend and buys back stock in the meantime. $38 is below our 10th-percentile outcome, so the bear case still implies value above that price, while a return to anything near the base case over three years implies about 20% a year before dividends. That is why the margin-of-safety price is $38.