JHX share price in focus
James Hardie Industries is a leading building solutions company and the world’s largest producer of fibre cement and gypsum products.
With operations spanning North America, Europe, Australia, and New Zealand, the company employs over 5,200 people.
Fibre cement is a popular choice for building materials due to its non-combustible nature, resistance to water and termite damage, durability, and low maintenance requirements.
REH shares
Reece Limited has been operating in Australia for more than 100 years, and is today the country’s largest plumbing and bathroom supplies business.
While best known as a plumbing store, the brand has diversified to offer services and products across irrigation and pools, civil construction projects, and HVAC systems for heating, ventilation, and refrigeration.
Reece has grown revenue at a steady clip the past few years and, while the dividend yield has typically been low, the payments have been quite consistent.
JHX & REH share price valuation
As a growth company, some of the trends we might investigate from JHX include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.
Since 2021, JHX has grown revenue at a rate of 10.6% per year to reach $3,936m in FY24. Over the same stretch of time, net profit has increased from $263m to $510m. As for ROE, JHX last reported a ROE of 29.4%.
Since REH is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, Reece Ltd reported a debt/equity ratio of 47.2%, meaning the company has more equity than debt.
As for dividends, since 2020 REH has paid an average dividend yield of 1.1% per year.
Finally, in FY24, REH reported an ROE of 11.2%. For a mature business you’re generally looking for an ROE of more than 10%, so REH clears this hurdle.
Keep in mind that these are only a small selection of metrics. We don’t have enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
