JHX share price in focus
James Hardie Industries is a building solutions company and the world’s largest producer of fibre cement and gypsum products.
The company operates across North America, Europe, Australia, and New Zealand with a team of more than 5,200 employees.
The main selling point of fibre cement for buildings is that the product doesn’t burn, is resistant to water and termite damage, and is durable and requires low maintenance.
REH shares
Reece Limited has been serving Australia for over a century and is now the nation’s largest supplier of plumbing and bathroom products.
While widely recognized as a plumbing retailer, Reece has expanded its offerings to include products and services for irrigation, pools, civil construction projects, and HVAC systems for heating, ventilation, and refrigeration.
The company has achieved steady revenue growth in recent years, and although its dividend yield is typically low, its payouts have remained consistent.
JHX & REH share price valuation
As a growth company, one way to put a broad estimate on the JHX share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, James Hardie Industries plc shares have a price-sales ratio of 2.95x, compared to its 5-year average of 4.14x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of JHX, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
Since REH is more of a ‘blue chip’ company, we could look at its dividend yield to determine its value. If we compare it to the historical dividend yield, we can get a sense of the stability of the company and its ability to pay out income. REH is paying a trailing dividend yield of around 1.93%, which compares to its 5-year average of 1.06%.
This is just one of many ways you could put a value on REH shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets which can help you learn how to value a company like JHX or REH.
