James Hardie Industries Plc (JHX)
All research reports and stock updates for James Hardie Industries Plc.
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Less bad renovation spend?
The strength in the JHX share price in 2023 (up >50% relative to the S&P/ASX 200) has been premised on a peaking of US mortgage rates which recently hit 7% in the US. This is despite the prospects of FY24E earnings being below FY23 given the impact of higher interest rates.
The margin game
The reticence to provide full year guidance for FY24 is understandable, but James Hardie is in a good position in the North American market where volumes are sliding. Our view is that the US housing market has troughed and operationally, JHX should be able to deliver on its 25%-plus EBIT margin promise.
Cycle turns in US
Consecutive earnings guidance downgrades for FY23 (year end 31 March) is now being overlooked in favour of a positive change in US housing market index data. Peers of James Hardie are reporting subtle but improving trends in activity.
Thumb hit
James Hardie has shocked the market with a significantly changed outlook, particularly to its North American business.
Backlog still key
The inflation monster has enveloped James Hardie’s costs, eating into the otherwise very good revenue growth. This has caused the company to downgrade its FY23 net profit guidance even though the construction backlog will stick around until January 2023.
Backlog is key
The good thing about cyclical industries such as housing construction, is that lessons learned can be applied in the future.
On autopilot
James Hardie may be without a permanent CEO at present, but the business is still performing admirably in challenging conditions.
Lay on, Macduff
James Hardie’s successful and embedded strategy has allowed the company to set an encouraging FY23 guidance range ahead of consensus. The search for a new CEO is a distraction but should not derail the momentum.
CEO dumped, guidance pumped
The dismissal of CEO Jack Truong is an unfortunate distraction to the strong underlying growth occurring across all regions for James Hardie. The company has upgraded its FY22 guidance which should please shareholders while the management is reshuffled.
Homeowners like Hardieplank
Stronger margins have propelled James Hardie's second quarter result to another good outcome despite rising raw material costs. Management is seeing enough momentum in the business to lift its FY22 guidance range.