JHX
James Hardie Industries plc
$26.02
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 40.3% above fair value
You pay
$26.02
Bear
$14.42
Fair
$18.54
Bull
$22.66
Bear
$14.42
-44.6%
$1.03 × 14x
Fair
$18.54
-28.7%
$1.03 × 18x
Bull
$22.66
-12.9%
$1.03 × 22x
Adjust Assumptions
18.0x
1.03$
Key Value Driver
Through-cycle normalized EPS ($1.03)
Implied Market Multiple
25.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (17 analysts)
$34.00
Divergence from AlphaVal
45%
Summary
Using 7-year normalized EPS of $1.03 at a 18x cycle multiple, the base-case value is $18.54 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 $34.00 (from 17 analysts). Our estimate is 45% 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