DAVY VIEW

CRH has issued a positive trading update (Q1 like-for-like (LFL) sales +7%), driven by improved momentum in European cement pricing and solid growth in the Americas. Given the company’s superior record of cash conversion, this is likely to strengthen its financial muscle and therefore capital allocation options. Presumably, this and the prospects of on-going improvements in returns are driving management’s decision to continue with its share buyback programme (€350m). This is despite the 31% increase in the share price over the past 12 months. At just over 8x our (conservative?) 2019 EBITDA forecast, the valuation continues to look attractive in both absolute and relative terms.