Investing.com -- RBC Capital Markets has initiated coverage on two major European building materials firms, Sika (SIX:SIKA) AG and Compagnie de Saint-Gobain, issuing contrasting outlooks based on differing earnings trajectories and end-market exposures.
Sika, a Swiss leader in construction chemicals, received an “outperform” rating with a price target of CHF276.
Analysts flagged the company’s consistent earnings track record, strong positioning in a high-growth segment, and potential gains from a recovery in European construction.
Sika’s 11% share in the global construction chemicals market places it in a sector growing more than twice as fast as traditional construction.
The brokerage has delivered a 12% compound annual growth rate in earnings per share over two decades, which RBC expects to rise to 13% between 2024 and 2028.
RBC projects that Sika’s EBITDA will beat consensus by 6% in fiscal year 2026, rising to 14% by 2028. The firm’s performance is expected to benefit from a combination of end-market recovery in Europe, pricing power supported by innovation, and operational efficiency programs.
RBC estimates Sika’s EBITDA margin will reach 21.9% by 2028, compared with guidance of 20–23%. The bank values Sika at 18.0x FY26 expected EBITDA, aligned with its five-year average, and noted that the current valuation reflects a 19% discount to the historical average.
By contrast, Saint-Gobain was rated “sector perform” with a price target of €110. RBC analysts said the French group is well positioned for long-term growth tied to energy-efficient renovation, which accounts for about half of expected 2024 revenue.
However, they added that near-term upside is limited due to soft market conditions in France and the U.S. residential sector.
As a result of mergers and acquisitions and an improvement in structural margins by around 300 basis points, Saint-Gobain has significantly transformed its portfolio in the last year.
RBC acknowledged this shift has enhanced the company’s earnings resilience and quality, with a current net debt-to-EBITDA ratio of 1.3x and further M&A capacity.
Despite these structural improvements, RBC noted that much of the upside is already priced in.
The stock is trading at a 7.6x EV/EBITDA multiple for FY26, a 24% premium to its 10-year average and the highest within the peer group.
Since its 2022 low, Saint-Gobain’s share price has climbed roughly 150%, half of which is attributed to multiple expansion.
RBC expects limited scope for further valuation rerating unless there are earnings upgrades.
The brokerage cited several constraints, including muted volume growth in the near term, a consensus margin forecast already close to management guidance, and potential headwinds from a U.S. slowdown and currency effects.
While Sika is positioned as a beneficiary of cyclical recovery with valuation upside, Saint-Gobain’s improved fundamentals appear largely reflected in its current share price, leading RBC to take a more cautious stance in the short term.