Intrinsic value of CRH ADR - CRH

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$36.02

  Intrinsic Value

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  Value-price divergence*

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$36.02

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CRH stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 29.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  14.68
  25.00
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
Revenue, $m
  28,606
  29,544
  36,339
  44,043
  52,666
  62,210
  72,668
  84,025
  96,264
  109,365
  123,307
  138,071
  153,641
  170,001
  187,144
  205,063
  223,761
  243,241
  263,516
  284,603
  306,522
  329,301
  352,973
  377,573
  403,145
  429,734
  457,390
  486,170
  516,133
  547,342
  579,865
Variable operating expenses, $m
 
  27,350
  33,470
  40,408
  48,175
  56,771
  66,190
  76,419
  87,442
  99,242
  111,799
  124,356
  138,379
  153,114
  168,554
  184,693
  201,533
  219,079
  237,340
  256,332
  276,074
  296,590
  317,910
  340,067
  363,098
  387,046
  411,955
  437,877
  464,863
  492,972
  522,264
Fixed operating expenses, $m
 
  391
  400
  410
  421
  431
  442
  453
  464
  476
  488
  500
  512
  525
  538
  552
  566
  580
  594
  609
  624
  640
  656
  672
  689
  706
  724
  742
  761
  780
  799
Total operating expenses, $m
  26,467
  27,741
  33,870
  40,818
  48,596
  57,202
  66,632
  76,872
  87,906
  99,718
  112,287
  124,856
  138,891
  153,639
  169,092
  185,245
  202,099
  219,659
  237,934
  256,941
  276,698
  297,230
  318,566
  340,739
  363,787
  387,752
  412,679
  438,619
  465,624
  493,752
  523,063
Operating income, $m
  2,139
  1,804
  2,469
  3,224
  4,070
  5,008
  6,036
  7,153
  8,358
  9,647
  11,020
  13,215
  14,749
  16,362
  18,052
  19,818
  21,662
  23,583
  25,582
  27,662
  29,824
  32,071
  34,407
  36,834
  39,357
  41,981
  44,711
  47,552
  50,509
  53,590
  56,802
EBITDA, $m
  3,279
  3,271
  4,103
  5,047
  6,106
  7,278
  8,563
  9,960
  11,465
  13,077
  14,793
  16,610
  18,527
  20,541
  22,653
  24,860
  27,163
  29,563
  32,061
  34,659
  37,360
  40,167
  43,085
  46,117
  49,269
  52,546
  55,956
  59,504
  63,199
  67,047
  71,058
Interest expense (income), $m
  365
  339
  521
  731
  968
  1,235
  1,529
  1,852
  2,202
  2,580
  2,984
  3,415
  3,870
  4,351
  4,856
  5,385
  5,938
  6,515
  7,116
  7,742
  8,392
  9,069
  9,772
  10,502
  11,262
  12,051
  12,871
  13,725
  14,613
  15,538
  16,501
Earnings before tax, $m
  1,837
  1,465
  1,948
  2,493
  3,102
  3,773
  4,507
  5,301
  6,155
  7,067
  8,036
  9,801
  10,879
  12,011
  13,196
  14,433
  15,724
  17,068
  18,466
  19,920
  21,432
  23,002
  24,635
  26,331
  28,096
  29,930
  31,839
  33,827
  35,896
  38,053
  40,301
Tax expense, $m
  497
  396
  526
  673
  838
  1,019
  1,217
  1,431
  1,662
  1,908
  2,170
  2,646
  2,937
  3,243
  3,563
  3,897
  4,245
  4,608
  4,986
  5,378
  5,787
  6,211
  6,651
  7,110
  7,586
  8,081
  8,597
  9,133
  9,692
  10,274
  10,881
Net income, $m
  1,312
  1,069
  1,422
  1,820
  2,265
  2,755
  3,290
  3,870
  4,493
  5,159
  5,866
  7,155
  7,942
  8,768
  9,633
  10,536
  11,478
  12,460
  13,480
  14,542
  15,645
  16,792
  17,983
  19,222
  20,510
  21,849
  23,243
  24,693
  26,204
  27,778
  29,420

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,585
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  33,345
  36,884
  45,367
  54,985
  65,751
  77,666
  90,721
  104,900
  120,180
  136,535
  153,941
  172,374
  191,811
  212,236
  233,637
  256,009
  279,352
  303,672
  328,984
  355,309
  382,674
  411,113
  440,665
  471,377
  503,302
  536,496
  571,024
  606,954
  644,361
  683,323
  723,927
Adjusted assets (=assets-cash), $m
  30,760
  36,884
  45,367
  54,985
  65,751
  77,666
  90,721
  104,900
  120,180
  136,535
  153,941
  172,374
  191,811
  212,236
  233,637
  256,009
  279,352
  303,672
  328,984
  355,309
  382,674
  411,113
  440,665
  471,377
  503,302
  536,496
  571,024
  606,954
  644,361
  683,323
  723,927
Revenue / Adjusted assets
  0.930
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
  0.801
Average production assets, $m
  14,001
  13,147
  16,171
  19,599
  23,436
  27,684
  32,337
  37,391
  42,837
  48,667
  54,872
  61,442
  68,370
  75,651
  83,279
  91,253
  99,573
  108,242
  117,265
  126,648
  136,402
  146,539
  157,073
  168,020
  179,399
  191,231
  203,539
  216,346
  229,679
  243,567
  258,040
Working capital, $m
  3,690
  1,595
  1,962
  2,378
  2,844
  3,359
  3,924
  4,537
  5,198
  5,906
  6,659
  7,456
  8,297
  9,180
  10,106
  11,073
  12,083
  13,135
  14,230
  15,369
  16,552
  17,782
  19,061
  20,389
  21,770
  23,206
  24,699
  26,253
  27,871
  29,556
  31,313
Total debt, $m
  8,222
  13,023
  18,266
  24,209
  30,863
  38,227
  46,295
  55,057
  64,500
  74,608
  85,365
  96,756
  108,768
  121,391
  134,617
  148,443
  162,868
  177,898
  193,541
  209,810
  226,722
  244,297
  262,560
  281,540
  301,270
  321,784
  343,122
  365,327
  388,444
  412,523
  437,616
Total liabilities, $m
  18,680
  22,794
  28,037
  33,980
  40,634
  47,998
  56,066
  64,828
  74,271
  84,379
  95,136
  106,527
  118,539
  131,162
  144,388
  158,214
  172,639
  187,669
  203,312
  219,581
  236,493
  254,068
  272,331
  291,311
  311,041
  331,555
  352,893
  375,098
  398,215
  422,294
  447,387
Total equity, $m
  14,665
  14,090
  17,330
  21,004
  25,117
  29,668
  34,656
  40,072
  45,909
  52,157
  58,806
  65,847
  73,272
  81,074
  89,249
  97,795
  106,712
  116,003
  125,672
  135,728
  146,182
  157,045
  168,334
  180,066
  192,261
  204,942
  218,131
  231,856
  246,146
  261,029
  276,540
Total liabilities and equity, $m
  33,345
  36,884
  45,367
  54,984
  65,751
  77,666
  90,722
  104,900
  120,180
  136,536
  153,942
  172,374
  191,811
  212,236
  233,637
  256,009
  279,351
  303,672
  328,984
  355,309
  382,675
  411,113
  440,665
  471,377
  503,302
  536,497
  571,024
  606,954
  644,361
  683,323
  723,927
Debt-to-equity ratio
  0.561
  0.920
  1.050
  1.150
  1.230
  1.290
  1.340
  1.370
  1.400
  1.430
  1.450
  1.470
  1.480
  1.500
  1.510
  1.520
  1.530
  1.530
  1.540
  1.550
  1.550
  1.560
  1.560
  1.560
  1.570
  1.570
  1.570
  1.580
  1.580
  1.580
  1.580
Adjusted equity ratio
  0.395
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,312
  1,069
  1,422
  1,820
  2,265
  2,755
  3,290
  3,870
  4,493
  5,159
  5,866
  7,155
  7,942
  8,768
  9,633
  10,536
  11,478
  12,460
  13,480
  14,542
  15,645
  16,792
  17,983
  19,222
  20,510
  21,849
  23,243
  24,693
  26,204
  27,778
  29,420
Depreciation, amort., depletion, $m
  1,140
  1,467
  1,634
  1,823
  2,035
  2,270
  2,527
  2,806
  3,107
  3,429
  3,772
  3,395
  3,777
  4,180
  4,601
  5,042
  5,501
  5,980
  6,479
  6,997
  7,536
  8,096
  8,678
  9,283
  9,912
  10,565
  11,245
  11,953
  12,689
  13,457
  14,256
Funds from operations, $m
  1,656
  2,536
  3,056
  3,644
  4,300
  5,025
  5,817
  6,676
  7,601
  8,589
  9,639
  10,549
  11,719
  12,948
  14,234
  15,578
  16,980
  18,440
  19,959
  21,539
  23,181
  24,888
  26,661
  28,505
  30,421
  32,414
  34,488
  36,646
  38,894
  41,235
  43,676
Change in working capital, $m
  -814
  319
  367
  416
  466
  515
  565
  613
  661
  707
  753
  797
  841
  883
  926
  968
  1,010
  1,052
  1,095
  1,139
  1,184
  1,230
  1,278
  1,328
  1,381
  1,436
  1,493
  1,554
  1,618
  1,685
  1,756
Cash from operations, $m
  2,470
  5,167
  2,689
  3,228
  3,834
  4,509
  5,253
  6,063
  6,940
  7,881
  8,886
  9,752
  10,878
  12,064
  13,308
  14,610
  15,970
  17,388
  18,864
  20,400
  21,997
  23,658
  25,383
  27,176
  29,041
  30,979
  32,995
  35,092
  37,276
  39,550
  41,920
Maintenance CAPEX, $m
  0
  -582
  -726
  -893
  -1,083
  -1,295
  -1,529
  -1,787
  -2,066
  -2,367
  -2,689
  -3,032
  -3,395
  -3,777
  -4,180
  -4,601
  -5,042
  -5,501
  -5,980
  -6,479
  -6,997
  -7,536
  -8,096
  -8,678
  -9,283
  -9,912
  -10,565
  -11,245
  -11,953
  -12,689
  -13,457
New CAPEX, $m
  -900
  -2,620
  -3,024
  -3,428
  -3,837
  -4,247
  -4,654
  -5,054
  -5,446
  -5,830
  -6,204
  -6,570
  -6,928
  -7,280
  -7,628
  -7,974
  -8,320
  -8,669
  -9,022
  -9,383
  -9,754
  -10,137
  -10,534
  -10,947
  -11,379
  -11,832
  -12,307
  -12,807
  -13,333
  -13,888
  -14,473
Cash from investing activities, $m
  -776
  -3,202
  -3,750
  -4,321
  -4,920
  -5,542
  -6,183
  -6,841
  -7,512
  -8,197
  -8,893
  -9,602
  -10,323
  -11,057
  -11,808
  -12,575
  -13,362
  -14,170
  -15,002
  -15,862
  -16,751
  -17,673
  -18,630
  -19,625
  -20,662
  -21,744
  -22,872
  -24,052
  -25,286
  -26,577
  -27,930
Free cash flow, $m
  1,694
  1,965
  -1,061
  -1,094
  -1,086
  -1,033
  -930
  -777
  -572
  -316
  -7
  150
  556
  1,006
  1,500
  2,035
  2,608
  3,218
  3,861
  4,538
  5,246
  5,985
  6,753
  7,551
  8,378
  9,235
  10,122
  11,040
  11,990
  12,972
  13,990
Issuance/(repayment) of debt, $m
  -1,493
  4,558
  5,243
  5,944
  6,653
  7,364
  8,068
  8,762
  9,443
  10,108
  10,757
  11,391
  12,012
  12,623
  13,226
  13,826
  14,426
  15,030
  15,643
  16,269
  16,911
  17,575
  18,263
  18,980
  19,729
  20,514
  21,338
  22,205
  23,117
  24,079
  25,093
Issuance/(repurchase) of shares, $m
  51
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,456
  4,558
  5,243
  5,944
  6,653
  7,364
  8,068
  8,762
  9,443
  10,108
  10,757
  11,391
  12,012
  12,623
  13,226
  13,826
  14,426
  15,030
  15,643
  16,269
  16,911
  17,575
  18,263
  18,980
  19,729
  20,514
  21,338
  22,205
  23,117
  24,079
  25,093
Total cash flow (excl. dividends), $m
  299
  6,523
  4,182
  4,850
  5,567
  6,331
  7,138
  7,985
  8,870
  9,792
  10,749
  11,541
  12,568
  13,629
  14,726
  15,861
  17,034
  18,248
  19,505
  20,807
  22,158
  23,560
  25,017
  26,531
  28,108
  29,749
  31,460
  33,245
  35,107
  37,051
  39,083
Retained Cash Flow (-), $m
  -929
  -2,837
  -3,241
  -3,674
  -4,113
  -4,552
  -4,987
  -5,416
  -5,837
  -6,248
  -6,649
  -7,041
  -7,425
  -7,802
  -8,175
  -8,546
  -8,917
  -9,290
  -9,669
  -10,056
  -10,453
  -10,864
  -11,289
  -11,732
  -12,195
  -12,680
  -13,190
  -13,725
  -14,289
  -14,884
  -15,510
Prev. year cash balance distribution, $m
 
  1,762
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,448
  941
  1,176
  1,455
  1,779
  2,151
  2,569
  3,034
  3,544
  4,100
  4,500
  5,143
  5,827
  6,551
  7,315
  8,117
  8,957
  9,835
  10,751
  11,704
  12,696
  13,728
  14,799
  15,912
  17,069
  18,271
  19,519
  20,818
  22,168
  23,572
Discount rate, %
 
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
 
  5,155
  838
  979
  1,127
  1,273
  1,411
  1,534
  1,636
  1,712
  1,757
  1,695
  1,684
  1,641
  1,569
  1,471
  1,353
  1,220
  1,079
  935
  794
  659
  536
  426
  331
  251
  186
  134
  94
  64
  42
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CRH plc, through its subsidiaries, manufactures and distributes building materials. The company operates through six segments: Europe Heavyside, Europe Lightside, Europe Distribution, Americas Materials, Americas Products, and Americas Distribution. The company manufactures and supplies cement, aggregates, ready-mixed and precast concrete, concrete landscaping, and asphalt products; and construction accessories, shutters and awnings, and fencing and composite access chambers. It also produces and sells concrete masonry and hardscapes; clay brick, packaged lawn, and garden products; packaged cement mixes; fencing, utility, drainage, and structural precast products; glass and aluminum glazing systems; and construction accessories, as well as provides asphalt paving services. In addition, the company is involved in distributing bricks, cement, sanitary, heating, plumbing, and other building products; exterior products, such as roofing and siding products; and interior products, including gypsum wallboards, metal studs, and acoustical ceiling systems. It operates 134 DIY (do-it-yourself) stores under the Karwei and GAMMA brand names in the Netherlands; 19 DIY stores under the GAMMA brand in Belgium; and 30 DIY stores under the Hagebau brand name in Germany. The company serves concrete producers and merchants, local government highway authorities, contractors, public and private construction sectors, architects and engineers, small and medium-sized builders, plumbers, heating specialists and installers, gas and water technicians, DIY enthusiasts and home improvers, residential and non-residential markets, and multi-family and commercial construction markets, as well as water, electrical, and telephone utilities. It operates primarily in Western Europe and North America, as well as in Eastern Europe, South America, the Philippines, China, and India. CRH plc was founded in 1936 and is headquartered in Dublin, Ireland.

FINANCIAL RATIOS  of  CRH ADR (CRH)

Valuation Ratios
P/E Ratio 22.9
Price to Sales 1
Price to Book 2
Price to Tangible Book
Price to Cash Flow 12.1
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 14.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.3%
Cap. Spend. - 3 Yr. Gr. Rate 11.4%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 54.1%
Total Debt to Equity 56.1%
Interest Coverage 6
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 5.7%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 9.2%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 30.8%
EBITDA Margin 11.7%
EBITDA Margin - 3 Yr. Avg. 10%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 4.9%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 27.1%
Eff/ Tax Rate - 3 Yr. Avg. 26.6%
Payout Ratio 28.4%

CRH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRH stock intrinsic value calculation we used $23635 million for the last fiscal year's total revenue generated by CRH ADR. The default revenue input number comes from 2016 income statement of CRH ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CRH stock valuation model: a) initial revenue growth rate of 25% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.7%, whose default value for CRH is calculated based on our internal credit rating of CRH ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CRH ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CRH stock the variable cost ratio is equal to 93.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $381 million in the base year in the intrinsic value calculation for CRH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4% for CRH ADR.

Corporate tax rate of 27% is the nominal tax rate for CRH ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CRH stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CRH are equal to 44.5%.

Life of production assets of 18.1 years is the average useful life of capital assets used in CRH ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CRH is equal to 5.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13015 million for CRH ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 822.222 million for CRH ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CRH ADR at the current share price and the inputted number of shares is $29.6 billion.


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COMPANY NEWS

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▶ ETFs with exposure to CRH Plc : April 19, 2017   [Apr-19-17 02:17PM  Capital Cube]
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▶ Business Watch   [Aug-27  07:41PM  at The Wall Street Journal]
▶ When PIIGS Fly: The Power Of Ireland's Politics   [Jun-11  06:54PM  at Investor's Business Daily]
▶ Interim Management Statement - May 2015   [May-06  02:16AM  at noodls]
▶ Total Voting Rights   [Apr-30  08:16AM  at noodls]
▶ Global Group Transformation Role Announcement   [Apr-27  06:46AM  at noodls]
▶ Director/PDMR Shareholding   [Apr-17  11:47AM  at noodls]
▶ Fleetmatics, CRH Lead Ireland's Top Non-Drug Stocks   [Apr-16  05:03PM  at Investor's Business Daily]
▶ Transaction in Own Shares   [Apr-15  06:46AM  at noodls]
▶ Interim Management Statement Notification   [Apr-14  04:03AM  at noodls]
▶ Blocklisting Interim Review   [Mar-31  10:18AM  at noodls]
▶ Miners Rise to the Top as FTSE 100 Breaks a Record   [Mar-20  12:13PM  at The Wall Street Journal]
Stock chart of CRH Financial statements of CRH Annual reports of CRH
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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