Shares in CRH jumped 3.28 per cent on the first day of trading in New York to close out the day at $56.37 (€53.20)
CRH shares had closed at €50.34 in Dublin last Wednesday, as it drew to an end an association with the exchange that went back 87 years.
Chief executive Albert Manifold rang the opening bell on the New York Stock Exchange on Monday after the company moved its primary listing from London – and dropped its Irish market quotation – as it seeks to secure inclusion in the near future on the S&P 500 and other keenly-followed US stock indices. Shares in the company moved higher in early trading on Wall Street.
The hope is that the group would also trade at a premium relative to profits by being listed in the US, where companies are traditionally valued on higher earnings multiples compared with Europe. It also wants to strengthen its chances of securing lucrative contracts under a $1.2 trillion US infrastructure programme. North America represents about 75 per cent of the group’s earnings.
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“Today marks an important milestone in CRH’s development which will enable us to fully participate in the significant growth opportunities that lie ahead for our business,” said Mr Manifold.
CRH also said on Monday that it is commencing the third phase of a $3 billion (€2.82 billion) share buyback programme for this year, as the building materials giant’s stock started trading on the New York Stock Exchange on Monday.
The company said it had hired units of Bank of America to repurchase $1 billion of its shares before December 20th on the London and US stock markets. However, stock purchases in the US will start only on October 23rd.
CRH has so far returned $6 billion to shareholders under ongoing share buyback programmes since May 2018.
Goodbody Stockbrokers analyst David O’Brien hiked his share price target on CRH to $72 from $50 on Monday, saying he expects the stock to “re-rate” – or push higher – as US investors become more familiar with CRH’s “ability to balance growth, cash generation, margin expansion and returns enhancement all to the benefit of shareholders”.
“The acid test of all businesses is, of course, cash generation and CRH has delivered strongly on this front. In the six years to the end of 2023, we estimate the group will have returned circa $12 billion of cash via ordinary dividends and share buy-backs while allocating a further $8.5 billion to capex and $10.8 billion to acquisitions,” said Mr O’Brien. Capex refers to capital expenditure, or investment.
“Looking forward, we believe the next five years provides firepower of circa $35 billion to CRH management to create further value for shareholders. Assuming continued growth in ordinary dividends and maintaining good levels of capex spend this could total $15 billion, providing $20 billion of optionality to be deployed on [mergers and acquisitions] and/or cash returns to shareholders.”
