Is It Time To Consider Buying James Hardie Industries plc (ASX:JHX)?

Let's talk about the popular James Hardie Industries plc (ASX:JHX). The company's shares saw significant share price movement during recent months on the ASX, rising to highs of AU$56.80 and falling to the lows of AU$41.76. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether James Hardie Industries' current trading price of AU$43.76 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at James Hardie Industries’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for James Hardie Industries

What's the opportunity in James Hardie Industries?

According to my valuation model, James Hardie Industries seems to be fairly priced at around 12% below my intrinsic value, which means if you buy James Hardie Industries today, you’d be paying a reasonable price for it. And if you believe the company’s true value is A$49.45, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that James Hardie Industries’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from James Hardie Industries?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. James Hardie Industries' earnings over the next few years are expected to increase by 82%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? JHX’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on JHX, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 3 warning signs with James Hardie Industries, and understanding them should be part of your investment process.

If you are no longer interested in James Hardie Industries, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.