JHX
James Hardie Industries plc
$20.76
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 18.0% above fair value
You pay
$20.76
Bear
$12.90
Fair
$17.59
Bull
$22.28
Bear
$12.90
-37.9%
$1.03 × 14x + net cash
Fair
$17.59
-15.3%
$1.03 × 18x + net cash
Bull
$22.28
+7.3%
$1.03 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.03)
Implied Market Multiple
20.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $24.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $17.59 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $24.00 (from 16 analysts). Our estimate is 36% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing