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The U.S. began charging a 50 percent tariff on billions of dollars of Canadian imports this weekend. Tariffs are taxes paid by companies when they bring goods across a border. For a building materials firm like CRH, this is a development to watch because the construction industry often relies on Canadian timber and metals.
If these tariffs stay in place, they could raise the cost of materials for large infrastructure projects in North America. While CRH owns many of its own quarries and local supplies, higher overall costs for its customers can sometimes slow down the pace of new construction.
Source: Barrons
Federal Reserve Chair Kevin Warsh is heading to Jackson Hole, a major annual meeting where central bankers signal their next moves. The stakes are high because recent government intervention in the bond market, where the U.S. borrows money, has raised questions about the Fed's independence in setting interest rates.
For CRH, the path of interest rates is the most important outside factor for the business. Higher rates make it more expensive for private developers to borrow money for housing and commercial buildings, which can lower demand for the rock and cement CRH sells.
Source: Bloomberg Markets and Finance
Kahn Swick & Foti is investigating the process behind CRH's planned 8.5 billion dollar purchase of Arcosa. These types of investigations are common after a large acquisition is announced. They rarely stop a deal from closing, but they can lead to minor delays or small settlements if a court finds the process was unfair to the selling company's owners.
Source: Business Wire
CRH has purchased Pisgah Stone Products, a producer of aggregates, the crushed rock and sand used in construction, based in Wellsville, Utah. This is a small but strategic move to secure more local supply in a region with a growing economy. Because heavy stone is expensive to move, owning the local quarry is a major advantage when nearby construction projects begin.
Source: Business Wire
Stephens lowered its price target for CRH to 125 dollars, down from 135 dollars previously. A price target is what an analyst thinks the stock will be worth in a year. Truist Securities also weighed in this week, keeping its buy rating. Even with the slight reduction from Stephens, the average analyst target of 140 dollars is still well above the current stock price.
Management has a history of setting conservative targets and clearing them, with five beats in the last eight quarters. The recent double-digit profit growth shows they are successfully raising prices to outrun higher costs.
| Expectation | |
|---|---|
| EPS | $2.22 |
| Revenue | $11.59B |