James Hardie Industries Attains 52-Week High - Analyst Blog

Shares of James Hardie Industries plc JHX reached a new 52-week high of $77.26 on Mar 27, surpassing the previous high of $69.30 on Mar 7. The latest rise was driven by improved results for the third quarter of fiscal 2014.

The stock closed at $65.66 at the end of trading yesterday, with a solid one-year return of over 32% and year-to-date return of about 13.5%, outperforming the S&P 500. The average volume of shares traded over the last three months was roughly 4726K. Based in Dublin, Ireland, this manufacturer and seller of fiber cement products and systems, has a market cap of $29 billion and long-term expected earnings growth of 23%.

Growth Drivers

Shares of James Hardie Industries have been rising, following the release of its third-quarter results on Feb 28. Adjusted earnings improved 67% to 10 cents per share from the prior-year quarter. However, results lagged the Zacks Consensus Estimate of 48 cents per share. Revenues increased 10% year over year to $353 million.

Cash flow from operating activities for the nine-month period ended Dec 31, 2013 increased to $254.7 million from $83.3 million in the prior-year comparable period, driven by amended tax assessment, decrease in contribution to Asbestos Injuries Compensation Fund Ltd. (AICF) and higher earnings.

On Nov 2013, James Hardie Industries declared a dividend of 8 cents per share (fiscal 2014 first-half dividend) compared with 5 cents in the year-ago comparable period. In addition, the company announced a special dividend of 28 cents per share. The 125-year anniversary special dividend will be paid on May 30, 2014 to shareholders of record on Mar 21, 2014.

The company forecasts earnings before interest and tax (EBIT) margin for full-year 2014 to be above 20% in the U.S.A and Europe Fibre Cement segment, led by improvement in the underlying market demand and better financial performance.

Moreover, management expects the operating environment in Australia to improve modestly. The New Zealand business is projected to deliver improved results on the back of a stronger local housing market, particularly in Auckland and Christchurch.

In addition, James Hardie Industries will benefit from the expected recovery in the U.S. housing market. However, uncertainty in the U.S. operating environment will adversely impact the company's margin.

James Hardie Industries currently holds a Zacks Rank #3 (Hold).

Other Stocks to Consider

Investors interested in the same sector include Gibraltar Industries, Inc. ROCK, USG Corporation USG and United Rentals, Inc. URI. While Gibraltar Industries sports a Zacks Rank #1 (Strong Buy), USG Corporation and United Rentals have a Zacks Rank #2 (Buy).