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CRH, Strong Growth Going Forward........

lse:crh

#1

CRH…CRH PLC

trading update yesterday bullish on second half.

<a href=‘https://www.investegate.co.uk/crh-plc--crh-/rns/trading-update---april-2018/201804250700110051M/’ target=‘window’>https://www.investegate.co.uk/crh-plc--crh-/rns/trading-update---april-2018/201804250700110051M/</a>

Good write up here…

<b>One Footsie dividend growth stock I?d buy and one I?d sell today
Rupert Hargreaves | Wednesday, 25th April, 2018</b>

Building materials company CRH (LSE: CRH) might not look like a traditional income stock at first glance, but current City forecasts suggest this business is going to grow into one over the next few years.

Indeed according to City figures, over the next two years CRH?s dividend payout to investors is expected to grow by around 10% to ?0.75 per share by 2019. But to me, this looks like a conservative forecast given CRH?s management has always prioritised investor returns.

For example, the firm announced today a ?1bn share buyback to return additional capital, even though trading during the first quarter has been mixed. Thanks to ?prolonged winter weather conditions and the timing of Easter holidays? first quarter like-for-like sales declined 2%. Group earnings before interest tax depreciation and amortisation (EBITDA) are expected to be in line with last year?s print.

Nevertheless, after this minor setback, management is expecting EBITDA to be ahead of last year in the second half ?in the absence of any major market dislocations,? according to its trading update issued today for the three months ended 31 March.

Improving the portfolio
CRH?s management is always on the lookout for ways to improve performance. Thanks to these efforts, earnings per share have more than doubled over the past six years. And it doesn?t look as if the enterprise is going to slow down anytime soon.

During the first quarter, the company spent ?150m on six bolt-on acquisitions and is planning ?1.5bn-?2bn for further portfolio divestments over the ?medium term? as the group tries to streamline its portfolio and improve overall returns. While some of this divestment cash will be returned to investors, I believe some will also be invested in new growth opportunities.

Analysts have pencilled in earnings per share growth of 24% of 2018, followed by 15% for 2019. Based on these estimates, the shares are trading at a 2019 P/E of 12.6, which looks to me to be too cheap considering CRH?s historical growth and income potential. The shares currently support a dividend yield of 2.6%.

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I agree with the tipster the stock looks very cheap given EPS growth going forward.

<b>Analysts have pencilled in earnings per share growth of 24% of 2018, followed by 15% for 2019</b>

Never mind an income stock those figures equate to a ZULU stock under the late Jim Slaters formula.

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