Intrinsic value of CRH ADR - CRH

Previous Close

$36.24

  Intrinsic Value

$96.17

stock screener

  Rating & Target

str. buy

+165%

  Value-price divergence*

+115%

Previous close

$36.24

 
Intrinsic value

$96.17

 
Up/down potential

+165%

 
Rating

str. buy

 
Value-price divergence*

+115%

*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 30.1

 

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
  14.70
  13.73
  12.86
  12.07
  11.36
  10.73
  10.15
  9.64
  9.18
  8.76
  8.38
  8.04
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
Revenue, $m
  28,606
  32,811
  37,316
  42,114
  47,197
  52,561
  58,200
  64,110
  70,290
  76,739
  83,460
  90,456
  97,732
  105,296
  113,157
  121,326
  129,815
  138,639
  147,814
  157,357
  167,286
  177,623
  188,390
  199,609
  211,305
  223,506
  236,237
  249,530
  263,414
  277,922
  293,088
Variable operating expenses, $m
 
  25,248
  28,608
  32,185
  35,976
  39,976
  44,181
  48,588
  53,196
  58,006
  63,018
  67,454
  72,880
  78,520
  84,382
  90,474
  96,805
  103,385
  110,227
  117,343
  124,747
  132,456
  140,485
  148,851
  157,573
  166,671
  176,165
  186,077
  196,431
  207,250
  218,559
Fixed operating expenses, $m
 
  4,575
  4,689
  4,806
  4,926
  5,049
  5,176
  5,305
  5,438
  5,574
  5,713
  5,856
  6,002
  6,152
  6,306
  6,464
  6,625
  6,791
  6,961
  7,135
  7,313
  7,496
  7,683
  7,875
  8,072
  8,274
  8,481
  8,693
  8,910
  9,133
  9,361
Total operating expenses, $m
  26,467
  29,823
  33,297
  36,991
  40,902
  45,025
  49,357
  53,893
  58,634
  63,580
  68,731
  73,310
  78,882
  84,672
  90,688
  96,938
  103,430
  110,176
  117,188
  124,478
  132,060
  139,952
  148,168
  156,726
  165,645
  174,945
  184,646
  194,770
  205,341
  216,383
  227,920
Operating income, $m
  2,139
  2,988
  4,019
  5,122
  6,295
  7,536
  8,843
  10,217
  11,655
  13,160
  14,729
  17,146
  18,850
  20,623
  22,468
  24,388
  26,385
  28,463
  30,627
  32,879
  35,226
  37,672
  40,222
  42,883
  45,660
  48,561
  51,591
  54,759
  58,073
  61,539
  65,167
EBITDA, $m
  3,279
  4,609
  5,755
  6,981
  8,284
  9,662
  11,114
  12,639
  14,236
  15,905
  17,647
  19,462
  21,352
  23,319
  25,365
  27,494
  29,709
  32,013
  34,411
  36,908
  39,509
  42,219
  45,045
  47,993
  51,070
  54,283
  57,639
  61,148
  64,817
  68,654
  72,671
Interest expense (income), $m
  365
  325
  436
  555
  681
  816
  957
  1,106
  1,261
  1,424
  1,594
  1,772
  1,956
  2,148
  2,347
  2,554
  2,770
  2,994
  3,226
  3,468
  3,720
  3,981
  4,254
  4,538
  4,834
  5,142
  5,464
  5,799
  6,150
  6,516
  6,898
Earnings before tax, $m
  1,837
  2,663
  3,583
  4,567
  5,613
  6,720
  7,886
  9,111
  10,394
  11,735
  13,135
  15,374
  16,894
  18,475
  20,121
  21,834
  23,615
  25,470
  27,400
  29,411
  31,506
  33,690
  35,968
  38,345
  40,826
  43,419
  46,128
  48,960
  51,923
  55,023
  58,269
Tax expense, $m
  497
  719
  967
  1,233
  1,516
  1,814
  2,129
  2,460
  2,806
  3,169
  3,546
  4,151
  4,561
  4,988
  5,433
  5,895
  6,376
  6,877
  7,398
  7,941
  8,507
  9,096
  9,711
  10,353
  11,023
  11,723
  12,454
  13,219
  14,019
  14,856
  15,733
Net income, $m
  1,312
  1,944
  2,616
  3,334
  4,098
  4,906
  5,757
  6,651
  7,588
  8,567
  9,588
  11,223
  12,333
  13,487
  14,688
  15,938
  17,239
  18,593
  20,002
  21,470
  22,999
  24,594
  26,257
  27,992
  29,803
  31,696
  33,673
  35,741
  37,904
  40,167
  42,536

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
  35,281
  40,125
  45,284
  50,750
  56,517
  62,580
  68,935
  75,580
  82,515
  89,742
  97,264
  105,088
  113,221
  121,674
  130,458
  139,586
  149,074
  158,940
  169,201
  179,878
  190,993
  202,570
  214,633
  227,210
  240,329
  254,019
  268,312
  283,241
  298,840
  315,148
Adjusted assets (=assets-cash), $m
  30,760
  35,281
  40,125
  45,284
  50,750
  56,517
  62,580
  68,935
  75,580
  82,515
  89,742
  97,264
  105,088
  113,221
  121,674
  130,458
  139,586
  149,074
  158,940
  169,201
  179,878
  190,993
  202,570
  214,633
  227,210
  240,329
  254,019
  268,312
  283,241
  298,840
  315,148
Revenue / Adjusted assets
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
Average production assets, $m
  14,001
  16,045
  18,248
  20,594
  23,080
  25,702
  28,460
  31,350
  34,372
  37,525
  40,812
  44,233
  47,791
  51,490
  55,334
  59,328
  63,480
  67,795
  72,281
  76,947
  81,803
  86,858
  92,123
  97,609
  103,328
  109,294
  115,520
  122,020
  128,809
  135,904
  143,320
Working capital, $m
  3,690
  1,608
  1,828
  2,064
  2,313
  2,575
  2,852
  3,141
  3,444
  3,760
  4,090
  4,432
  4,789
  5,160
  5,545
  5,945
  6,361
  6,793
  7,243
  7,710
  8,197
  8,704
  9,231
  9,781
  10,354
  10,952
  11,576
  12,227
  12,907
  13,618
  14,361
Total debt, $m
  8,222
  10,640
  13,537
  16,622
  19,890
  23,339
  26,965
  30,765
  34,739
  38,886
  43,208
  47,706
  52,385
  57,248
  62,303
  67,556
  73,015
  78,689
  84,588
  90,724
  97,109
  103,756
  110,679
  117,893
  125,414
  133,259
  141,445
  149,992
  158,920
  168,249
  178,000
Total liabilities, $m
  18,680
  21,098
  23,995
  27,080
  30,348
  33,797
  37,423
  41,223
  45,197
  49,344
  53,666
  58,164
  62,843
  67,706
  72,761
  78,014
  83,473
  89,147
  95,046
  101,182
  107,567
  114,214
  121,137
  128,351
  135,872
  143,717
  151,903
  160,450
  169,378
  178,707
  188,458
Total equity, $m
  14,665
  14,183
  16,130
  18,204
  20,401
  22,720
  25,157
  27,712
  30,383
  33,171
  36,076
  39,100
  42,245
  45,515
  48,913
  52,444
  56,114
  59,928
  63,894
  68,019
  72,311
  76,779
  81,433
  86,283
  91,338
  96,612
  102,116
  107,861
  113,863
  120,134
  126,689
Total liabilities and equity, $m
  33,345
  35,281
  40,125
  45,284
  50,749
  56,517
  62,580
  68,935
  75,580
  82,515
  89,742
  97,264
  105,088
  113,221
  121,674
  130,458
  139,587
  149,075
  158,940
  169,201
  179,878
  190,993
  202,570
  214,634
  227,210
  240,329
  254,019
  268,311
  283,241
  298,841
  315,147
Debt-to-equity ratio
  0.561
  0.750
  0.840
  0.910
  0.970
  1.030
  1.070
  1.110
  1.140
  1.170
  1.200
  1.220
  1.240
  1.260
  1.270
  1.290
  1.300
  1.310
  1.320
  1.330
  1.340
  1.350
  1.360
  1.370
  1.370
  1.380
  1.390
  1.390
  1.400
  1.400
  1.410
Adjusted equity ratio
  0.395
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402
  0.402

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,312
  1,944
  2,616
  3,334
  4,098
  4,906
  5,757
  6,651
  7,588
  8,567
  9,588
  11,223
  12,333
  13,487
  14,688
  15,938
  17,239
  18,593
  20,002
  21,470
  22,999
  24,594
  26,257
  27,992
  29,803
  31,696
  33,673
  35,741
  37,904
  40,167
  42,536
Depreciation, amort., depletion, $m
  1,140
  1,621
  1,736
  1,859
  1,989
  2,126
  2,271
  2,422
  2,580
  2,745
  2,917
  2,316
  2,502
  2,696
  2,897
  3,106
  3,324
  3,549
  3,784
  4,029
  4,283
  4,548
  4,823
  5,110
  5,410
  5,722
  6,048
  6,388
  6,744
  7,115
  7,504
Funds from operations, $m
  1,656
  3,565
  4,352
  5,193
  6,087
  7,032
  8,028
  9,073
  10,168
  11,312
  12,506
  13,539
  14,835
  16,183
  17,585
  19,045
  20,563
  22,142
  23,787
  25,499
  27,282
  29,141
  31,080
  33,102
  35,213
  37,418
  39,721
  42,129
  44,648
  47,282
  50,040
Change in working capital, $m
  -814
  206
  221
  235
  249
  263
  276
  290
  303
  316
  329
  343
  357
  371
  385
  400
  416
  432
  450
  468
  487
  507
  528
  550
  573
  598
  624
  651
  680
  711
  743
Cash from operations, $m
  2,470
  3,359
  4,131
  4,958
  5,838
  6,769
  7,751
  8,783
  9,865
  10,996
  12,177
  13,196
  14,478
  15,812
  17,200
  18,644
  20,147
  21,710
  23,337
  25,031
  26,796
  28,635
  30,552
  32,552
  34,640
  36,820
  39,098
  41,478
  43,967
  46,572
  49,297
Maintenance CAPEX, $m
  0
  -733
  -840
  -955
  -1,078
  -1,208
  -1,346
  -1,490
  -1,641
  -1,800
  -1,965
  -2,137
  -2,316
  -2,502
  -2,696
  -2,897
  -3,106
  -3,324
  -3,549
  -3,784
  -4,029
  -4,283
  -4,548
  -4,823
  -5,110
  -5,410
  -5,722
  -6,048
  -6,388
  -6,744
  -7,115
New CAPEX, $m
  -900
  -2,044
  -2,203
  -2,346
  -2,486
  -2,623
  -2,757
  -2,890
  -3,022
  -3,154
  -3,286
  -3,421
  -3,558
  -3,699
  -3,844
  -3,995
  -4,151
  -4,315
  -4,486
  -4,666
  -4,856
  -5,055
  -5,265
  -5,486
  -5,720
  -5,966
  -6,226
  -6,500
  -6,789
  -7,094
  -7,416
Cash from investing activities, $m
  -776
  -2,777
  -3,043
  -3,301
  -3,564
  -3,831
  -4,103
  -4,380
  -4,663
  -4,954
  -5,251
  -5,558
  -5,874
  -6,201
  -6,540
  -6,892
  -7,257
  -7,639
  -8,035
  -8,450
  -8,885
  -9,338
  -9,813
  -10,309
  -10,830
  -11,376
  -11,948
  -12,548
  -13,177
  -13,838
  -14,531
Free cash flow, $m
  1,694
  581
  1,088
  1,656
  2,273
  2,938
  3,648
  4,403
  5,202
  6,043
  6,925
  7,639
  8,604
  9,611
  10,660
  11,753
  12,889
  14,071
  15,301
  16,580
  17,911
  19,297
  20,740
  22,243
  23,810
  25,444
  27,150
  28,930
  30,790
  32,733
  34,765
Issuance/(repayment) of debt, $m
  -1,493
  2,708
  2,897
  3,085
  3,269
  3,449
  3,626
  3,800
  3,974
  4,147
  4,322
  4,498
  4,679
  4,864
  5,055
  5,253
  5,459
  5,674
  5,899
  6,136
  6,385
  6,647
  6,923
  7,214
  7,521
  7,845
  8,187
  8,547
  8,928
  9,329
  9,752
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
  2,708
  2,897
  3,085
  3,269
  3,449
  3,626
  3,800
  3,974
  4,147
  4,322
  4,498
  4,679
  4,864
  5,055
  5,253
  5,459
  5,674
  5,899
  6,136
  6,385
  6,647
  6,923
  7,214
  7,521
  7,845
  8,187
  8,547
  8,928
  9,329
  9,752
Total cash flow (excl. dividends), $m
  299
  3,289
  3,985
  4,741
  5,542
  6,387
  7,274
  8,204
  9,175
  10,190
  11,247
  12,137
  13,283
  14,475
  15,715
  17,005
  18,348
  19,745
  21,201
  22,716
  24,296
  25,944
  27,663
  29,457
  31,331
  33,289
  35,336
  37,477
  39,717
  42,062
  44,517
Retained Cash Flow (-), $m
  -929
  -1,813
  -1,947
  -2,074
  -2,197
  -2,318
  -2,437
  -2,555
  -2,671
  -2,788
  -2,905
  -3,024
  -3,145
  -3,270
  -3,398
  -3,531
  -3,670
  -3,814
  -3,966
  -4,125
  -4,292
  -4,468
  -4,654
  -4,850
  -5,056
  -5,274
  -5,503
  -5,746
  -6,001
  -6,271
  -6,556
Prev. year cash balance distribution, $m
 
  2,295
  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
 
  3,772
  2,037
  2,667
  3,345
  4,068
  4,837
  5,649
  6,504
  7,402
  8,342
  9,113
  10,138
  11,205
  12,317
  13,474
  14,678
  15,931
  17,235
  18,592
  20,004
  21,476
  23,009
  24,608
  26,275
  28,016
  29,833
  31,731
  33,716
  35,791
  37,962
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  3,613
  1,861
  2,314
  2,742
  3,135
  3,485
  3,783
  4,022
  4,199
  4,310
  4,256
  4,244
  4,169
  4,035
  3,849
  3,618
  3,351
  3,057
  2,746
  2,429
  2,113
  1,808
  1,519
  1,254
  1,015
  806
  627
  477
  355
  257
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 public limited company (CRH plc) is a building materials company. The Company's segments include Europe Heavyside, Europe Lightside, Europe Distribution, Americas Materials, Americas Products, Americas Distribution and Asia. Europe Heavyside segment is engaged in the manufacturing and supply of aggregates, asphalt, cement, readymixed and precast concrete and landscaping products. Europe Lightside segment manufactures and supplies products and solutions for customers in global construction markets. Through its Europe Distribution segment, the Company distributes building materials to professional builders, specialist heating and plumbing contractors, and Do-It-Yourself (DIY) customers. Americas Materials segment is a vertically integrated supplier of aggregates, asphalt, cement, readymixed concrete and paving and construction services. Through Americas Distribution segment, the Company is a distributor of roofing, siding, drywall, ceiling systems and related accessories.

FINANCIAL RATIOS  of  CRH ADR (CRH)

Valuation Ratios
P/E Ratio 23
Price to Sales 1.1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 19.2
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 $28606 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 14.7% 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 4.4%, 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 77.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4463 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 4.1% 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 48.9%.

Life of production assets of 19.1 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 4.9%. 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 - $14665 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 831.672 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 $30.1 billion.

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COMPANY NEWS

▶ Company News For Sep 22, 2017   [Sep-22-17 10:18AM  Zacks]
▶ The 'Trump Trade' Looks Like It's Alive and Well   [Sep-21-17 02:54PM  TheStreet.com]
▶ Is the 'Trump Trade' Alive and Well?   [12:30PM  TheStreet.com]
▶ CRH Cements $3.5 Billion Deal with Ash Grove   [03:54AM  TheStreet.com]
▶ [$$] CRH Unveils $3.5 Billion U.S. Buy   [02:46AM  The Wall Street Journal]
▶ ETFs with exposure to CRH Plc : September 12, 2017   [Sep-11-17 10:27PM  Capital Cube]
▶ ETFs with exposure to CRH Plc : August 31, 2017   [Aug-31-17 05:54PM  Capital Cube]
▶ CRH Shuffles the Deck   [07:09AM  Bloomberg]
▶ CRH PLC Announces Development Update   [02:00AM  Marketwired]
▶ ETFs with exposure to CRH Plc : August 4, 2017   [Aug-03-17 08:03PM  Capital Cube]
▶ CRH PLC: Board change   [Jul-27-17 02:00AM  Marketwired]
▶ ETFs with exposure to CRH Plc : July 13, 2017   [Jul-13-17 03:48PM  Capital Cube]
▶ ETFs with exposure to CRH Plc : June 14, 2017   [Jun-14-17 01:32PM  Capital Cube]
▶ ETFs with exposure to CRH Plc : May 2, 2017   [May-02-17 03:52PM  Capital Cube]
▶ ETFs with exposure to CRH Plc : April 19, 2017   [Apr-19-17 02:17PM  Capital Cube]
▶ ETFs with exposure to CRH Plc : April 5, 2017   [Apr-05-17 04:34PM  Capital Cube]
▶ Is Ventas, Inc. (VTR) A Good Stock To Buy?   [Dec-13-16 11:16AM  Insider Monkey]
▶ Is CBS Corporation (CBS) A Good Stock To Buy?   [Nov-30-16 01:26PM  Insider Monkey]
▶ FTSE 100 ends higher as investors scoop up retailers   [Nov-17-16 12:53PM  at MarketWatch]
▶ Watch These Stocks for a Breakout Move (CSCO, CRH)   [Oct-03-16 01:00PM  at Investopedia]
▶ Daily Market Summary   [Mar-29-16 09:53PM  at noodls]
▶ Director/PDMR Shareholding   [Mar-23-16 04:19AM  at noodls]
▶ Materials Sector: Industries Snapshot (DOW, DD)   [Mar-16-16 09:50AM  at Investopedia]
▶ Which of Europes Piigs might fly?   [Feb-11-16 06:38AM  at MarketWatch]
▶ Total Voting Rights   [Jan-29-16 08:21AM  at noodls]
▶ Holding(s) in Company   [Jan-26-16 03:07AM  at noodls]
Financial statements 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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