JAMES HARDIE IND PLC-SP ADR (NYSE:JHX) – A GARP Candidate Worth Considering

JAMES HARDIE IND PLC-SP ADR (NYSE:JHX) emerged from our Peter Lynch-inspired screen as a potential candidate for long-term investors seeking growth at a reasonable price. The company, a leading provider of fiber cement building solutions, meets several key criteria for sustainable growth, solid profitability, and sound financial health.

Key Strengths

• Strong Earnings Growth: Over the past five years, JHX has delivered an average annual EPS growth of 18.85%, aligning with Peter Lynch’s preference for steady but sustainable expansion.
• Healthy Profitability: The company’s return on equity (ROE) stands at 20.76%, well above the 15% threshold Lynch favored, indicating efficient use of shareholder capital.
• Reasonable Valuation: With a P/E ratio of 16.56, JHX trades below both the industry average and the S&P 500, suggesting it is not overpriced relative to its earnings.
• Solid Financial Health: A current ratio of 2.18 and a debt-to-equity ratio of 0.52 reflect a balanced capital structure and ample liquidity to meet short-term obligations.

Fundamental Highlights

Our fundamental analysis report rates JHX at 6 out of 10, noting its strong financial health and improving margins. While revenue growth has slowed recently, the company maintains a competitive gross margin of 39.45%, outperforming most peers. Additionally, JHX has consistently reduced its share count and debt levels, signaling disciplined capital management.

Why It Fits the GARP Approach

Growth at a reasonable price (GARP) investors look for companies that balance earnings expansion with sensible valuations. JHX fits this profile with its:

• Stable historical growth in both revenue and earnings.
• Attractive PEG ratio (though negative due to recent earnings fluctuations, the underlying growth remains strong).
• Industry-leading margins, suggesting pricing power and operational efficiency.

For investors seeking similar opportunities, our Peter Lynch Strategy screener provides a curated list of stocks meeting these criteria.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own research before making investment decisions.