Analyst Note| Trevor Huynh |
We maintain our wide moat rating for James Hardie and maintain our fair value estimate for of AUD 40 per share following a transfer of coverage. James Hardie screens as attractively priced, trading at a 32% discount to our fair value estimate. We see market pricing in elevated levels of short-term uncertainty driven by a rapid increase in interest rates affecting housing demand in both the U.S. and Australia. We believe this negative sentiment is overstated and undervalues James Hardie’s quality and long-term potential to generate an average estimated return on invested capital, or ROIC, of 17% per year over the next decade.