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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$57.89 and falling to the lows of AU$48.37. 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$49.71 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?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 2.42% above our intrinsic value, which means if you buy James Hardie Industries today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is A$48.54, then there isn’t really any room for the share price grow beyond what it’s currently trading. 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.
What kind of growth will James Hardie Industries generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 68% over the next couple of years, the future seems bright for James Hardie Industries. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in JHX’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?