American construction solutions provider, CRH (NYSE:CRH), has recently relocated its primary stock listing from Europe to the U.S., a strategic move aimed at increasing shareholder value. The company's CEO, Albert Manifold, marked this significant shift by ringing the opening bell at the New York Stock Exchange on Monday.
The decision to relocate was driven by several factors. North America accounts for approximately three-quarters of CRH's profits, making it the largest building materials provider in the country. Despite its operational presence, the company was largely perceived as a European entity by U.S. investors and was primarily covered by EU-based analysts. The relocation is expected to align CRH's perception with its operational reality and increase its exposure to U.S. investors.
Since the relocation announcement, CRH's shares have risen by approximately 12%, while the S&P 500 has seen a 3% increase. As of Monday's midday trading, CRH's stock was up by about 2.3%, while the S&P 500 and Dow Jones Industrial Average were up by about 0.3% and 0.1% respectively.
This shift has already begun to influence CRH's trading volume, which has seen a tenfold increase year over year to around 6.5 million shares in the past 20 days. This surge allows American institutional investors to consider CRH stock for their portfolios. The company's daily trading value has risen to nearly $350 million, enabling mutual fund managers overseeing billions of dollars to trade its stock.
In terms of valuation, CRH trades at roughly 12 times its estimated earnings for 2024. In comparison, Vulcan Materials (NYSE:NYSE:VMC), a similar U.S.-based materials provider, trades at about 24 times its earnings. Both companies have comparable growth rates, margins and markets. While Vulcan's operating profit margins are around 18% with projected annual growth of about 7%, CRH's earnings are expected to grow close to 9% annually. However, CRH's profit margins stand at around 13%.
Despite the lower margin percentage, CRH maintains higher levels of absolute profitability due to its more extensive construction-services business. For instance, CRH's total operating profit for 2024 is projected at $4.6 billion compared to Vulcan's $1.6 billion.
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