CRH’s shares soared to a record high on Monday as investors got their first chance to cheer news that the building materials and services giant is to join the S&P 500 in New York, the world’s most widely-followed stocks index.
The company’s shares rose 6.3 per cent to an all-time high of $127.05 in early trading on Wall Street, home of their main listing. That gave the group a market value of $85 billion (€73.1 billion).
S&P Dow Jones announced that CRH would be joining the influential index, effective December 22nd, after trading ended in the US on Friday evening. Inclusion of the stock in the index will force fund managers that track the S&P 500 to buy CRH shares.
“CRH’s inclusion in the S&P 500 index later in December is well-deserved recognition of the company’s place as the US’ leading provider of construction materials,” said Colin Sheridan, an analyst with Irish stockbroker Davy.
READ MORE
“Its addition to the index could create demand for circa 17 per cent of outstanding shares, and we expect the announcement to catalyse a further re-rating – and outperformance – relative to peers.”
He noted that the stock was currently trading at a 30 per cent discount to its closest US peers, Martin Marietta and Vulcan Materials, the only other two construction materials groups in the S&P 500.
CRH’s board had set its sights on joining the S&P 500 from when it decided in 2023 to move its main stock quotation from London to New York and drop its Irish listing in the process.
Goodbody stockbrokers analyst Shane Carberry said: “We expect that the wider investor attention from being part of the S&P 500 index will further underpin our thesis that a continued re-rating towards – and even beyond – peers is justified.”
CRH chief executive Jim Mintern, who took over as chief executive in January, unveiled a medium-term strategy in late September, which includes plans to spend $40 billion (€34.2 billion) on investment and cash returns to shareholders over the next five years as it continues to grow revenues and earnings apace.
The CEO is also targeting annual revenue growth of 7-9 per cent out to 2030 and aiming for the group to post adjusted Ebitda margins of 22-24 per cent over the period.
“Joining the S&P 500 is a powerful recognition of our market leadership. CRH is the largest provider of building materials in North America, and our unmatched scale, connected portfolio of businesses, and deep local relationships make our future compelling,” Mr Mintern said in a statement on Monday.
“We are proud to be recognised as a leading US company and look forward to continuing to modernize the critical infrastructure that will help power America’s economy for generations to come.”
