James Hardie Industries plc (ASX:JHX), a construction materials company based in Ireland, saw a double-digit share price rise of over 10% in the past couple of months on the ASX. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine JHX’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for James Hardie Industries

What is JHX worth?

According to my relative valuation model, JHX seems to be currently fairly priced. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that JHX’s ratio of 26.5x is trading slightly above its industry peers’ ratio of 23x, which means if you buy JHX today, you’d be paying a relatively fair price for it. And if you believe JHX should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like JHX’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because JHX’s stock is less volatile than the wider market given its low beta.

What kind of growth will JHX 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 JHX future expectations. With profit expected to grow by 26.80% over the next couple of years, the future seems bright for JHX. It looks like higher cash flows 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 JHX? 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 JHX, 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.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on James Hardie Industries. You can find everything you need to know about JHX in the latest infographic research report. If you are no longer interested in James Hardie Industries, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.