CRH plc Inc. (CRH) stock gained by 1.87% in the last trading close whereas the CRH stock rises by 20.72% during pre-market trading session. CRH plc has not given any news through a press release but quite recently on March 25, it was being announced that Moody’s Investors Service has today declared CRH plc’s Baa1 long term issuer rating. With headquarters in Dublin, Ireland, CRH plc is an Irish multinational company of diversified building materials businesses that produce and supply a broad array of products for the construction industry.
What is happening?
On March 25, The Baa1 long-term issuer rating of CRH plc has been verified by Moody’s Investors Service. At the same time, the agency confirmed the group’s senior unsecured EMTN program rating of (P) Baa1 and supported commercial paper program rating of P-2. The outlook for all ratings is unchanged. Also the Assistant Vice President of Moody’s Vitali Morgovski said that, CRH track record of preserving solid credit metrics and consistently positive free cash flow production is reflected in today’s rating action. Despite the pandemic situation, CRH’s success in 2020 was strong, and it is expected to remain strong as the economy recovers in the next 12-18 months.
CRH strong cash balance and continuing positive FCF generation give it plenty of room to explore inorganic opportunities without endangering its current ranking. The rating of CRH is largely based on the group’s:
- Good product Diversification.
- The strong vertical integration, with a greater exposure to more durable and less capital-intensive light-side building materials than its cement competitors.
- Strong liquidity profile.
- Regional diversification, despite the fact that CRH is more concentrated on established developed markets in Europe and North America than its competitors.
- Credit indicators, which held up well through the downturn in 2009-11 and will continue to do so in 2020.
This is probably due to which the CRH stock price is rising since the investors are liking to hold on CRH stock because of its robust performance even in the pandemic.
Constraints faced by CRH’s rating
Given below are the problems that were being faced by CRH:
- The unsustainability of construction end-markets.
- Economic development is still being hampered by continued lockdowns, and some construction sub-segments, such as non-residential construction, are seeing weaker demand outlooks.
- M&A-related event risk, considering CRH’s history of multibillion-dollar acquisitions, notwithstanding last year’s relatively low activity on that front.
- Increasing shareholder salaries through higher dividends and share buybacks.