Are Investors Undervaluing James Hardie Industries (JHX) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

James Hardie Industries (JHX) is a stock many investors are watching right now. JHX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Investors will also notice that JHX has a PEG ratio of 1.15. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. JHX's PEG compares to its industry's average PEG of 1.36. Over the last 12 months, JHX's PEG has been as high as 1.33 and as low as 1.15, with a median of 1.24.

Finally, we should also recognize that JHX has a P/CF ratio of 12.84. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.81. Within the past 12 months, JHX's P/CF has been as high as 31.48 and as low as 12.84, with a median of 19.69.

These figures are just a handful of the metrics value investors tend to look at, but they help show that James Hardie Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, JHX feels like a great value stock at the moment.

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