# James Hardie (JHX)

Sector: Building products

| Field | Value |
|---|---|
| Price | $25.82 |
| Fair value (Analysts) | $31.50 |
| Discount to fair value | 18% |
| Fair value uncertainty (Analysts) | High |
| Economic moat (Analysts) | Wide |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 1.5 |
| Data as of | 2026-10-15 |
| Next earnings | 2026-11-06 (estimate) |

## In short

Investors doubt the AZEK deal and fear weak US housing while James Hardie carries more debt, and steady growth with lower leverage by September 2027 can close the gap.

## Themes and gap

- Themes: High debt (leverage), Interest rates (interest-rates)
- Gap type: Can close (closable)
- Why: The Q2 fiscal 2027 report, the Fermacell closing in the first half of 2027 and the leverage target of September 30, 2027 give dated checks.

## About

James Hardie makes exterior building products for homes. It is the leader in fiber cement siding and trim in North America, sold under the Hardie brand. In July 2025, it bought AZEK, which makes TimberTech composite and PVC decking and railing, AZEK Exteriors trim and StruXure pergolas. It reports two main segments, Siding & Trim and Deck, Rail & Accessories, and it also sells in Australia and New Zealand. It makes money from the margin on these products, which it sells through distributors, dealers and home improvement retailers to builders, remodelers and homeowners. Net sales were $4.84 billion in the fiscal year to March 31, 2026. The company is incorporated in Ireland. Its primary listing is on the New York Stock Exchange under the ticker JHX, and its shares also trade on the ASX as CHESS units of foreign securities (CUFS) under the same ticker.

## Thesis

James Hardie trades at a discount because investors doubt the AZEK purchase and fear a weak US housing market while the company carries much more debt. Gross debt was $4.3 billion at June 30, 2026, most of it secured, after the company paid for AZEK partly with $1.7 billion of new notes and with secured loans. Shareholder support is also not complete: at the annual meeting on August 20, 2026, about 16% of votes withheld support from the Chair, and about 20% voted against the CEO equity grant. The company also keeps an asbestos liability in Australia that it funds each year. Recent results are better. In Q1 fiscal 2027, organic net sales in Siding & Trim rose 20%, adjusted EBITDA was $422 million, and management raised its fiscal 2027 outlook. Management said that this growth does not come from a better housing market, and that part of it came from an easy comparison with a year of inventory reduction. For the gap to close, James Hardie must keep organic growth in fiber cement, reach its $125 million cost synergy target and its $500 million revenue synergy target, deliver at least $500 million of free cash flow in fiscal 2027, close the €840 million sale of Fermacell to Holcim in the first half of 2027, and bring net leverage below 2.0 times by September 30, 2027. The next test is the Q2 fiscal 2027 report, expected in early November 2026. The Fermacell closing in the first half of 2027 and the leverage target in the second half of 2027 follow. If these conditions hold, the gap can close over the next four to six quarters. The main risk is a longer fall in US housing activity that cuts volumes before the debt comes down.

## Checkpoints

- Nov 6, 2026 (estimate): Q2 fiscal 2027 results: organic growth and free cash flow. Status: Pending. Watch: Net sales of $1.485 billion to $1.575 billion, adjusted EBITDA of $420 million to $455 million and continued organic growth in fiber cement pass; results below guidance or a cut to the fiscal 2027 outlook fail.
- Sep 30, 2027: Net leverage below 2.0 times. Status: Pending. Watch: Net leverage below 2.0 times at the end of Q2 fiscal 2028 passes; leverage above the target fails.
- 2027 (estimate): Closing of the Fermacell sale to Holcim. Status: Pending. Watch: The sale closes for €840 million and about $600 million goes to debt repayment; a delay or a lower price fails.

## Balance sheet

- Cash: $290M
- Debt: $4.3B
- Net debt: $4.0B
- Interest cover: 3.5×
- Undrawn credit line: $843M, to May 2030
- Debt due within 12 months: $44M
- Last debt due: 2032

Most debt is secured. At June 30, 2026, it consisted of $700 million of 5.875% notes due 2031, $1.0 billion of 6.125% notes due 2032, a $750 million term loan due 2028, a $1.71 billion term loan due 2030 and $150 million drawn on the revolving facility. The weighted average interest rate was 5.5%. In June 2026, the company redeemed $400 million of unsecured notes due 2028 with cash and a revolver draw, so gross debt fell to $4.31 billion from $4.57 billion at March 31, 2026. The $1.0 billion revolving facility runs to May 30, 2030, and $843 million of it was available. Interest cover uses GAAP operating income and net interest for Q1 fiscal 2027, and it is low because operating income includes the amortization of AZEK intangible assets. The figures leave out $102 million of finance lease liabilities and the asbestos liability, which was $980 million at June 30, 2026, against $213 million of restricted asbestos investments. Management guided fiscal 2027 adjusted EBITDA of $1.536 billion to $1.625 billion and free cash flow of at least $500 million, and it targets net leverage below 2.0 times by the end of Q2 fiscal 2028 (September 30, 2027). It expects to use about $600 million from the sale of Fermacell to repay debt.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/1159152/000115915226000051/jhx-20260630.htm
- https://www.sec.gov/Archives/edgar/data/1159152/000162828026054382/ex992erq1fy27.htm
- https://www.sec.gov/Archives/edgar/data/1159152/000162828026058265/exh991-jhxpressrelease.htm
- https://www.sec.gov/Archives/edgar/data/1159152/000115915226000045/jhx-20260331.htm

## Recent events

- 2026-10-01: Jennifer Kong-Picarello, CFO of Terex, joined the board as an independent non-executive director. She is expected to join the Audit Committee in November 2026.
- 2026-09-15: At its first Investor Day since the AZEK purchase, James Hardie set a target of annual organic growth of 4% to 7% above its markets, without a housing recovery. It said that it expects to reach its $125 million cost synergy target about one year early and that the $500 million revenue synergy target is on track. It reaffirmed its target of net leverage below 2.0 times by Q2 fiscal 2028, raised its fiscal 2027 free cash flow target and kept its Q2 and fiscal 2027 guidance.
- 2026-08-20: James Hardie agreed to sell Fermacell, its European walling and flooring business, to Holcim for €840 million in cash, and it plans to close its European fiber cement business. It expects to use about $600 million of the proceeds to repay debt, and the board approved a $250 million share buyback. The sale is expected to close in the first half of 2027. At the annual meeting on the same day, about 16% of votes withheld support from Chair Nigel Stein, and about 20% voted against the CEO equity grant.
- 2026-08-06: James Hardie reported Q1 fiscal 2027 results. Net sales were $1.475 billion, up 64%, or 12% on a pro forma basis. Siding & Trim net sales rose 34%, or 20% organically. Adjusted EBITDA was $422 million, and free cash flow was $254 million. The company raised its fiscal 2027 outlook to total adjusted EBITDA of $1.536 billion to $1.625 billion and reaffirmed free cash flow of at least $500 million.
- 2026-08-03: James Hardie and Boise Cascade expanded their nationwide distribution partnership in the US. James Hardie also announced broader partnerships with regional distributors.
- 2026-06-25: James Hardie redeemed its $400 million of 5.00% senior unsecured notes due 2028, with cash on hand and a draw on its revolving facility.
- 2026-05-19: James Hardie reported fiscal 2026 results. Net sales were $4.84 billion, up 25% because of AZEK, but organic net sales fell 2%. Net income was $104 million, and adjusted EBITDA was $1.27 billion. The company guided pro forma adjusted EBITDA growth of 4% to 8% for fiscal 2027.

## Risks

- High: Sales depend on US new construction and repair and remodel activity. Management said that forward indicators stayed soft in Q1 fiscal 2027 and that its outlook does not assume a better housing market. Part of the Q1 growth came from an easy comparison with a year of channel inventory reduction, and this benefit gets smaller during the year.
- High: Debt rose after the AZEK purchase. Gross debt was $4.3 billion at June 30, 2026, mostly secured term loans and notes at a weighted average rate of 5.5%. The term loans have variable rates, partly hedged with an interest rate swap. If cash flow falls short, the target of net leverage below 2.0 times by September 30, 2027 can slip.
- Medium: The company must integrate AZEK and deliver $125 million of cost synergies and $500 million of revenue synergies. Deck, Rail & Accessories had an operating loss in Q1 fiscal 2027, and its pro forma sales fell 5% while the company reduced channel inventory.
- Medium: At the annual meeting on August 20, 2026, about 20% of votes were against the CEO equity grant and about 16% withheld support from the Chair. Continued opposition from shareholders can put pressure on the board and management.
- Low: James Hardie funds the Asbestos Injuries Compensation Fund in Australia. It will pay A$128.2 million to the fund in fiscal 2027, and the asbestos liability on the balance sheet was about $980 million at June 30, 2026. Higher claims can raise the required payments.

## Links

- Page: https://picks.kamadorueda.com/company/JHX/
- History of changes: https://picks.kamadorueda.com/company/JHX/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/JHX.json

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