JHX
James Hardie Industries plc
$25.86
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 37.9% above fair value
You pay
$25.86
Bear
$13.75
Fair
$18.75
Bull
$23.76
Bear
$13.75
-46.8%
$1.03 × 14x + net cash
Fair
$18.75
-27.5%
$1.03 × 18x + net cash
Bull
$23.76
-8.1%
$1.03 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.03)
Implied Market Multiple
25.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $28.67 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $18.75 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 $28.67 (from 16 analysts). Our estimate is 46% 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