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A CRH insider has snapped up $2.5mn (£1.9mn) in shares after the dual-listed FTSE 100 building materials supplier posted a jump in earnings and pre-tax profit in its full-year results.
Non-executive director Richard Fearon bought 10,000 shares at $83.65 each on the New York Stock Exchange on March 1, the day after the company posted results for the 2023 calendar year. He bought a further 20,000 shares at $81.51 the following Monday.
CRH posted a 22 per cent jump in earnings per share in its results, with its well-covered dividend rising by 5 per cent. Revenue climbed 7 per cent to $34.9bn, bolstered by government infrastructure contracts.
The share price wobbled on results day as the numbers didn’t quite hit analyst consensus expectations, but shares remain 65 per cent above the level at which they traded a year ago, when the company first considered moving its primary listing to the US. That move took place in September, and the shares have accelerated further in New York and London since.
Despite this, some still feel both bourses undervalue the stock. Analysts at Jefferies increased their 2024 cash profit estimates on the back of the full-year figures, judging CRH’s own 2024 forecasts to be “conservative”.
Jefferies said it sees “further upside from synergies” from the company’s $2.1bn purchase of cement and ready-mixed concrete assets in the Texas market from Martin Marietta Materials. It now has a price target of $100 for the stock, which would generate a 21.6 per cent return on Fearon’s purchase if met.
Jefferies added: “Our deep dive into CRH’s [American materials business], examining site location, regional concentration, and the potential for integration, concludes that [those operations] continue to be underestimated both in terms of organic growth potential and in terms of how this can be supplemented by further consolidation.”
AO director backs share rally
AO World’s share price has doubled since hitting an all-time low last summer. The electricals retailer has made a “strategic pivot to profit and cash” and Mike Ashley’s Frasers has increased its stake in the business to 25 per cent.
The shares now look somewhat fully valued, given they currently sit above the consensus analyst target price of 90p. They trade hands at 19 times forward consensus earnings, an expensive rating when compared against the FTSE All-Share Retailers index, which trades at 12 times.
Nevertheless, non-executive director Chris Hopkinson is confident the stock can keep growing. He bought £592,000 worth of shares on March 6, as a trustee and beneficiary of the Hopkinson Consultants Pension Scheme.
AO World raised its annual pre-tax profit guidance for 2023 to a range of £28mn to £33mn in November, after pivoting to a £13.2mn pre-tax profit for the six months to 30 September on the back of the elimination of underperforming revenue streams, cost cutting, and the introduction of charges on all deliveries. The gross margin rose 400 basis points to 23.5 per cent.
The top-line performance was less pretty. Revenue was down 12 per cent in the half, indicating market share losses, and the company expects it to fall by around a tenth over the full year. A combination of weaker demand and cutting down sales channels hurt the business.
The mobile arm in particular has struggled, but this could be helped by AO World’s acquisition last month of the intellectual property rights to mobile retailer A1 Comms’ websites, bought for £2.2mn after the latter fell into administration. A1 Comms posted £152mn of annual revenue in its last set of results.
