As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of James Hardie Industries plc (ASX:JHX), it is a company with strong financial health as well as an optimistic future outlook. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on James Hardie Industries here.
Reasonable growth potential with adequate balance sheet
JHX is expected to churn out cash in the short term, with its operating cash flow predicted to expand by 52%. This is expected to flow down into an impressive return on equity of 29% over the next couple of years. JHX’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that JHX has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. JHX appears to have made good use of debt, producing operating cash levels of 0.21x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For James Hardie Industries, I’ve put together three important factors you should further examine:
- Historical Performance: What has JHX’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Valuation: What is JHX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether JHX is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of JHX? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.