Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on James Hardie Industries plc (ASX:JHX) due to its excellent fundamentals in more than one area. JHX is a financially-robust company with a great track record and a buoyant future outlook. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on James Hardie Industries here.
Proven track record with reasonable growth potential
Over the past year, JHX has grown its earnings by 25%, with its most recent figure exceeding its annual average over the past five years. Not only did JHX outperformed its past performance, its growth also exceeded the Basic Materials industry expansion, which generated a -39% earnings growth. This is what investors like to see!
JHX's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. JHX appears to have made good use of debt, producing operating cash levels of 0.25x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
For James Hardie Industries, there are three essential factors you should look at:
- 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.
- Dividend Income vs Capital Gains: Does JHX return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from JHX as an investment.
- 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.