Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 8.2 |
| EV/EBITDA | 2.6 |
| Fwd P/E | 8.0 |
| PEG | 6.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.0x
- ▸PEG: 1.24
JHX · Why this verdict
Why James Hardie Industries (JHX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
James Hardie combines industry-leading revenue growth of 44% with exceptional free cash flow conversion at 356% of net income and a Piotroski score of 8 out of 9, but the stock trades above its near-term target at overbought levels with an extreme options put/call ratio of 17.33 and a high-concentration supplier dependency.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Dependence on a single capped-compounds supplier is flagged as a high-concentration risk in the company's own risk disclosures, creating vulnerability to supply disruption or pricing pressure that could impair margins and production volumes. Bear case | The company discloses sourcing from at least 2 qualified compound suppliers within the next 12 months, reducing single-source dependency. | →Stable |
| CounterThe company's Piotroski score of 8 out of 9 and strong historical cash conversion suggest this supplier relationship has been managed effectively; the risk is real but may be partially offset by existing contractual protections. | ||
With RSI at 71 and the price trading above the near-term target, the stock is technically extended; the risk/reward is unfavorable for new capital at this level, and an extreme put/call ratio of 17.33 signals substantial options market hedging activity. Momentum breakdown | RSI cools below 55 and price pulls back below the near-term resistance level within two quarters, creating a more attractive entry point. | →Stable |
| CounterIn high-growth building materials businesses, overbought momentum readings can persist alongside volume accumulation for an extended period; selling into strong price action risks missing the next advance if revenue growth sustains above 20%. | ||
Revenue grew 44% year-over-year, positioning the company as the growth leader within its peer group in building materials, with volume accumulation confirming demand for the shares alongside the business. Growth breakdown | Revenue growth remains above 20% year-over-year for the next two quarters, sustaining the growth-leader positioning. | →Stable |
| CounterReliance on a single capped-compounds supplier represents a high-concentration supply-chain risk; any disruption to that source could impair production and derail the revenue trajectory materially. | ||
Free cash flow is running at 356% of reported net income, indicating the business generates substantially more cash than accounting earnings suggest and providing financial flexibility well beyond what the income statement shows. Quality breakdown | Free cash flow remains above 150% of reported net income for the next four quarters, sustaining the quality of the cash generation profile. | →Stable |
| CounterA gap this wide between free cash flow and net income warrants scrutiny; if the accounting treatments or one-time items driving the disparity normalize, the apparent cash conversion advantage could shrink sharply. | ||
Dependence on a single capped-compounds supplier is flagged as a high-concentration risk in the company's own risk disclosures, creating vulnerability to supply disruption or pricing pressure that could impair margins and production volumes.
→StableBear case
- Expectation
- The company discloses sourcing from at least 2 qualified compound suppliers within the next 12 months, reducing single-source dependency.
CounterThe company's Piotroski score of 8 out of 9 and strong historical cash conversion suggest this supplier relationship has been managed effectively; the risk is real but may be partially offset by existing contractual protections.
With RSI at 71 and the price trading above the near-term target, the stock is technically extended; the risk/reward is unfavorable for new capital at this level, and an extreme put/call ratio of 17.33 signals substantial options market hedging activity.
→StableMomentum breakdown
- Expectation
- RSI cools below 55 and price pulls back below the near-term resistance level within two quarters, creating a more attractive entry point.
CounterIn high-growth building materials businesses, overbought momentum readings can persist alongside volume accumulation for an extended period; selling into strong price action risks missing the next advance if revenue growth sustains above 20%.
Revenue grew 44% year-over-year, positioning the company as the growth leader within its peer group in building materials, with volume accumulation confirming demand for the shares alongside the business.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year-over-year for the next two quarters, sustaining the growth-leader positioning.
CounterReliance on a single capped-compounds supplier represents a high-concentration supply-chain risk; any disruption to that source could impair production and derail the revenue trajectory materially.
Free cash flow is running at 356% of reported net income, indicating the business generates substantially more cash than accounting earnings suggest and providing financial flexibility well beyond what the income statement shows.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 150% of reported net income for the next four quarters, sustaining the quality of the cash generation profile.
CounterA gap this wide between free cash flow and net income warrants scrutiny; if the accounting treatments or one-time items driving the disparity normalize, the apparent cash conversion advantage could shrink sharply.
Per-dimension breakdown
Quality
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.8 |
| ROA | 3.4 |
| Gross margin | 3.4 |
| Op margin | 7.6 |
| Net margin | 1.1 |
| Current ratio | 5.7 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 356% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 0.0 |
- ▸Strong growth: 44% YoY
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.8 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.7 |
| Price target | 6.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (7.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $68,730 (0.000% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 0.0 |
| growth rank | 9.2 |
- ▸Industry growth leader
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.4 |
| 52w position | 7.8 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| days to cover | 7.0 |
| volatility | 2.0 |
| put call | 10.0 |
| implied vol | 4.1 |
| beta | 6.8 |
| debt equity | 6.4 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.4 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:4.8>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:54d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (2)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.44
Upside
-6.6%
Downside
15.0%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 65, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.4=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.44 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.5, Catalyst at 6.1, and Risk (lower is worse) at 6.0; the weakest are Technical at 2.7, Peer rank at 4.0, and Momentum at 4.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.44 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue grew 44% year-over-year, positioning the company as the growth leader within its peer group in building materials, with volume accumulation confirming demand for the shares alongside the business.
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P2Free cash flow is running at 356% of reported net income, indicating the business generates substantially more cash than accounting earnings suggest and providing financial flexibility well beyond what the income statement shows.
Trip ifFree cash flow falls below 100% of reported net income for 2 consecutive quarters.
- P3With RSI at 71 and the price trading above the near-term target, the stock is technically extended; the risk/reward is unfavorable for new capital at this level, and an extreme put/call ratio of 17.33 signals substantial options market hedging activity.
Trip ifPrice rises more than 15% above current levels while RSI sustains above 70 for 4 consecutive weeks, demonstrating the overbought condition resolved by continued advance rather than consolidation.
- P4Dependence on a single capped-compounds supplier is flagged as a high-concentration risk in the company's own risk disclosures, creating vulnerability to supply disruption or pricing pressure that could impair margins and production volumes.
Trip ifCompany discloses qualified compound sourcing from at least 2 independent suppliers, reducing single-source dependency.