JAMES HARDIE INDUSTRIES PLC (JHX): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/JHX

Headline

Field	Value
Ticker	JHX
Company	JAMES HARDIE INDUSTRIES PLC
Current price	$26.07/sh
Composition	Siding & Trim 61% / Deck, Rail & Accessories 16% / Australia & New Zealand 11% / Europe 12%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	7.2%
Operating margin today	9.3%
Margin compression (value-band)	-2.1pp
Must persist for	9.7y
Multiple paid	44x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.

How unusual the bet is: elevated

Reference	Value
vs own history	+0.40σ
sustained it ~9.7 years at this level	15%
implied end-window share	0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	7.28x	3	expensive
Earnings	14.82x	2	expensive
Relative	2.21x	3	expensive
Growth	1.20x	3	expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=11)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$3.71	7.03x	yes	FCF base $0.2B, growth 8% (input: historical growth), terminal g 4.0%, WACC 7.6%, 6yr projection
DCF Exit Multiple	Growth	$24.08	1.08x	yes	Exit EV/EBITDA: 18.8x / 20.8x / 22.8x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$11.79	2.21x	yes	P/E 39.6x (blended: static sector reference 18x + trailing (TTM) 145x), scenarios: 32.8x / 39.6x / 46.4x (bear / base = reference held flat / bull), EV/EBITDA 14.64x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$1.94	13.44x	yes	BV/sh $11.07, ROE (TTM) 1.6%, ke 9.3%
Two-Stage Excess Return	Asset	$1.06	24.59x	yes	5yr excess ROE then converge to ke=9.3% (excluded from median)
Discounted Future Market Cap	Growth	$21.72	1.20x	yes	Rev $4.8B, growth 8% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.1x / 3.7x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/E	Relative	—	—	no	—
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$1.54	16.93x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.68B × (1−40%) / WACC 7.6% → EPV (no growth)
Residual Income	Asset	$0.77	33.85x	yes	BV $11.07 + 5yr PV of (ROE (TTM) 1.6% − Kₑ 9.3%) × BV; BV grows 1.1%/yr (excluded from median)
Graham Number	Asset	$6.88	3.79x	yes	√(22.5 × EPS $0.19 × BVPS $11.07) — Graham's conservative floor
EV/EBITDA Relative	Relative	$11.78	2.21x	yes	EBITDA $0.94B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$0.01	2606.50x	yes	FCF $205.9M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF Yield	Earnings	$0.01	2606.50x	yes	SBC-adj FCF $0.17B (FCF $0.21B − SBC $0.04B) capitalized at Kₑ (excluded from median)
Ben Graham Formula	Earnings	$0.16	162.91x	yes	EPS $0.19 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/B	Asset	$3.58	7.28x	yes	BV $11.07 × (ROIC 2.5% / WACC 7.6%)
P/Sales Sector	Relative	$20.83	1.25x	yes	Revenue $4.84B × sector P/S 2.5x
PEG Fair Value	Relative	—	—	no	—
Earnings Yield	Earnings	$2.05	12.71x	yes	EPS $0.19 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$4.4b
Net debt / NOPAT (after-tax)	19.40x
Net debt / operating income (pre-tax)	9.76x
Interest coverage	1.9x
Share count CAGR (dilution)	5.2%
Burning cash	no

Bullet Takeaways

• James Hardie is the dominant maker of fiber cement siding, the durable, fire-resistant exterior cladding it has spent decades persuading homeowners to choose over vinyl and wood, and it just acquired AZEK to add composite decking and outdoor-living products.
• The AZEK deal reshaped the company: full-year sales rose 25% to $4.84 billion but GAAP net income fell to $104 million from $424 million, and long-term debt climbed to about $4.5 billion.
• At $24.88 only the growth-DCF reaches the price; the asset, earnings-power, and peer-multiple methods all say richly valued, so the price is a bet on the moat and the merger synergies that the static frames cannot capture.

Bull Case

The case for James Hardie rests on a genuine competitive moat, and the moat shows up in the margins. Fiber cement is not a commodity building product; it is a category James Hardie effectively created and still dominates, and it has spent decades and large marketing budgets converting homeowners away from vinyl and wood siding toward its more durable, fire-resistant boards. That category leadership earns it returns most building-materials companies cannot match: the business runs operating margins in the mid-teens, with adjusted EBITDA of $1.27 billion on $4.84 billion of full-year sales, a roughly 26% EBITDA margin that signals real pricing power rather than commodity economics. Pricing power is the clearest evidence of a moat, and Hardie's ability to push average selling prices up 5% even as volumes softened shows it.

The demand story is structural even when the housing cycle is soft. Fiber cement continues to take share from vinyl and wood because it lasts longer, resists fire and rot, and increasingly meets stricter building codes in wildfire-prone regions, a tailwind that grows as those codes tighten. The conversion story means Hardie can grow its addressable market even in a flat housing environment, by winning a larger slice of every re-side and new-build. That secular share gain is why the growth-DCF, the one method that reaches the price, is arguably the honest lens: the value is in the multi-year conversion of the siding market, not in a single year's depressed earnings.

The AZEK acquisition extends the moat into an adjacent category with the same dynamics. AZEK's TimberTech composite decking competes against Trex and wood the way Hardie's siding competes against vinyl: a premium, durable material taking share from legacy options, sold to the same contractors and homeowners through overlapping channels. Management reports continued progress on both cost and commercial synergies, and the combination creates a broader exterior-and-outdoor-living franchise with cross-selling potential. The bull case is a category-defining business with proven pricing power and a structural share-gain story, now extended into a second premium-conversion category, where the depressed reported earnings reflect acquisition accounting and a soft housing cycle rather than the through-cycle earnings power the moat supports.

Bear Case

The competitive threat the bull case underweights is that James Hardie's premium-conversion playbook works only as long as the premium products keep winning, and the rivals on the other side of that conversion are not standing still. In siding, vinyl remains far cheaper and good enough for a large share of price-sensitive buyers, and a soft housing market pushes homeowners toward the lower-cost option exactly when Hardie needs them to trade up; the company's own organic volumes already declined mid-single digits as the conversion stalled in a weak cycle. In decking, the AZEK business now squares off directly against Trex, the larger composite-decking leader, in a category where the two have competed hard on price and product for years. Buying into the decking war via AZEK means inheriting that competitive intensity, not escaping it.

The disruption risk is sharper because the conversion thesis depends on consumers paying up during a stretch when they are reluctant to. If wood and vinyl rivals close the durability gap with improved products, or if a prolonged housing downturn trains buyers to choose cheaper materials, the share-gain engine that justifies the premium valuation slows. The organic net-sales decline of about 2% for the year, even as the acquisition lifted reported revenue 25%, is the early evidence that the legacy fiber-cement market is under pressure, and a competitor making progress on price or performance would compound that.

Only after the competitive picture does the valuation and balance sheet turn the screw. At $24.88 the asset, earnings-power, and peer-multiple methods all land far below the price; only the growth-DCF reaches it, by assuming the conversion story and the AZEK synergies fully deliver over many years. The framework flags the name as elevated, with a fade signal tripped. Layered on top is the debt: the AZEK deal pushed long-term debt to about $4.5 billion, and GAAP net income collapsed 75% to $104 million under the weight of acquisition costs and amortization. A levered, premium-priced building-materials company whose growth depends on consumers trading up in a soft housing market, while facing entrenched competitors in both siding and decking, has little cushion if the conversion thesis or the integration disappoints. The bear case is competitive and cyclical first, and the rich, debt-financed valuation makes those risks expensive to be wrong about.

Valuation

James Hardie is an elevated case where the reported earnings are distorted by the AZEK acquisition and the price leans entirely on the growth lens. At $24.88 the asset, earnings-power, and peer-multiple methods all say richly valued: the excess-return and residual-income methods land near $1 to $2, the earnings-power value near $2, relative valuation near $12, and EV/EBITDA near $13. The exit-multiple DCF reaches near $23 and the discounted-future-market-cap method near $21, close to the price, while the perpetual-growth DCF is the only method that exceeds it. The blended figure across the methods is near $4, which reflects how heavily acquisition costs and amortization depress the reported earnings the static methods anchor on.

The valuation therefore turns on normalized, post-synergy earnings rather than the reported figures. The AZEK deal lifted reported revenue 25% but crushed GAAP net income to $104 million, so the trailing earnings understate the combined company's true earning power once integration costs roll off. The inversion treats the price as a bet on durable compounding over a long runway, with an implied duration near nine years, which is the conversion-and-synergy story expressed as a valuation.

The balance sheet is a material part of the risk. The acquisition pushed long-term debt to about $4.5 billion, and against the operating income the business currently reports, leverage is meaningful, though the reported figure is depressed by deal accounting.

Catalysts

The defining event for James Hardie was the AZEK acquisition, completed July 1, 2025, which added TimberTech, AZEK Exteriors, and related brands and reshaped the company into a broader exterior-and-outdoor-living business. The deal lifted full-year net sales 25% to $4.84 billion and adjusted EBITDA 17% to $1.27 billion, but GAAP net income fell to $104 million from $424 million, and the balance sheet expanded with long-term debt climbing to about $4.5 billion and total assets to $13.69 billion. The most recent quarter showed revenue up 45% on the acquisition while organic net sales declined about 1%, with fiber-cement exterior volumes down mid-single digits partly offset by 5% price growth.

The catalysts from here are integration and cycle driven. The key things to watch are the pace of cost and commercial synergy capture from AZEK, which management says is progressing, the trajectory of organic fiber-cement volumes as a signal of whether the premium-conversion story is reaccelerating, and the housing cycle, since both new construction and re-siding demand depend on it. Deleveraging from the elevated post-acquisition debt level is a multi-year priority that the market will track. Competitive dynamics against vinyl and wood in siding and against Trex in decking are the structural backdrop. The question that resolves the stock is whether the combined company can convert its moat and synergies into the normalized earnings the price assumes, while bringing the debt down, or whether a soft housing market and competitive pressure keep the reported economics below the elevated valuation.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• OC (Owens Corning)
• FY2025 10-K: …primarily driven by the a full year of revenues from our Doors segment and higher selling prices for our Roofing and Insulation segments, which were partially offset by lower sales volumes across all three segments. GROSS MARGIN Gross margin decreased $203 million in 2025 compared to 2024. The decrease was primarily…
• FY2025 10-K: …certain other expense or income items, are excluded from the internal evaluation of segment performance. Accordingly, these items are not reflected in EBITDA for our reportable segments and are included in the Corporate, Other and Eliminations category, which is presented following the discussion of our reportable…
• AMRZ (Amrize Ltd)
• FY2025 10-K: …demand, partially offset by strong commercial roofing repair and refurbishment activity and system revenue s . Building Envelope Segment Adjusted EBITDA decreased $38 million in 2025 , or 4.9% , compared to 2024 . The decrease in Building Envelope Segment Adjusted EBITDA was attributable to lower volumes and pricing,…
• FY2025 10-K: …on a variety of factors, including quality, value proposition, capacity, price, customer service, delivery time and proximity to the customer. Our principal competitors in the United States are Cemex, Buzzi-Unicem, Heidelberg Materials and CRH, as well as numerous local and regional players. Many of the regions in…
• CRH (CRH public limited company)
• FY2025 10-K: …The Company is currently evaluating the provisions of this ASU. 62 CRH FORM 10-K 2. Revenue The Company disaggregates revenue based on its operating and reportable segments. The Company's operating and reportable segments are: (1) Americas Materials Solutions, (2) Americas Building Solutions, and (3) International…
• FY2025 10-K: …Americas Materials Solutions and Americas Building Solutions; and CRH's International Division contains the other segment. Within CRH's segments, revenue is disaggregated by principal activities and products. Business lines are reviewed and evaluated as follows: (1) Essential Materials, (2) Road Solutions, (3)…
• EXP (EAGLE MATERIALS INC.)
• FY2025 10-K: …and taxes are managed on a centralized basis, and not included in segment operating information. Our business is organized into two sectors within which there are four reportable business segments. The Heavy Materials sector includes the Cement and Concrete and Aggregates segments. The Light Materials sector includes…
• FY2025 10-K: …Since 2012, we have invested approximately $2.6 billion to expand the Heavy Materials sector. These investments have more than doubled our U.S. cement capacity. Growth in the Heavy Materials sector has been achieved mainly through acquisitions, which have expanded our geographic footprint, resulting in a contiguous…
• FBIN (Fortune Brands Innovations, Inc.)
• FY2025 10-K: …resource allocation decisions. Segment operating income excludes unallocated corporate costs. Operating income is the primary measure of segment profitability used in internal management reporting to the CODM. This measure is used to view operating trends, perform analytical comparisons and benchmark performance…
• FY2025 10-K: Segment Raw Materials Water Brass, zinc, resins, stainless steel and aluminum Outdoors Wood, aluminum, steel, plastics, resins, glass, vinyl and insulating foam Security Steel, zinc, brass and resins Intellectual property. Product innovation and branding are important to the success of our business. In addition to the…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

James Hardie FY26 results, StockTitan / Globe and Mail, 2026 · James Hardie FY26 results, Globe and Mail, 2026 · James Hardie FY26 results, StockTitan, 2026