The James Hardie Industries Plc [ASX:JHX] shares are up after the company announced record Q1 2022 results.
James Hardie, one of the largest producers of high-performance fibre cement and fibre gypsum building solutions, saw its shares trade at $50.14, up 4.65% at the time of writing.
If you zoom out a bit, you will observe that the stock has been in a consistent uptrend for the past year.
Investors have seen a return of 66.31% over the course of 12 months.
A deep dive into James Hardie’s June quarter performance
A likely reason why JHX shares are rising today is the record quarterly net sales posted by the company.
So let’s dissect the results.
North American fibre cement segment net sales jumped 28% to US$577.1 million, while Europe’s building products segment net sales increased 37% to €103.3 million.
To top this all off, Asia Pacific fibre cement segment net sales increased 33% to AU$184.1 million.
As a result, the global-adjusted EBIT increased 45% to US$180.5 million.
Due to momentum building in all three regions, JHX reported volume growth of 25%.
Global net sales rose 35% to $843.3 million from $626.3 million.
If we look at the dividend side of James Hardie, the FY2021 special dividend of 70 US cents per share was paid to CUFS holders on 30 April.
The company noted the Australian currency equivalent amount of the FY2021 special dividend was 89.94 cents.
Lastly, the strong operating cash flow generation of US$184.1 million in the first quarter was backed by continuous improvement in James Hardie’s LEAN manufacturing performance, strong profitable organic sales growth, and the integration of its supply chain with their customers.
The working capital also improved by US$30.5 million during the first quarter of FY22.
The company achieved the global LEAN savings target of US$130.1 million over the course of a 27-month period.
In short, James Hardie’s FY22 performance was strong.
Dr Jack Truong, James Hardie’s CEO, was impressed by the results:
‘I am very pleased that this first quarter marked our ninth consecutive quarter of delivering growth above market and strong returns.
‘In our investor day at the end of May, we described our three critical initiatives for fiscal year 2022 through fiscal year 2024: (1) market directly to homeowners to accelerate demand creation, (2) penetrate and drive profitable growth in existing and new segments and (3) commercialize global innovations by expanding into new categories.
‘Further, we discussed our focus on driving a high value product mix in all three regions.’
Outlook for James Hardie shares
James Hardie’s record net sales backed by consistent growth in different regions acted as a catalyst for the jump of 4.65% in today’s share price.
James Hardie is one of the biggest producers of cement and it is the key raw material in construction.
Construction activity is rising at a rapid pace, especially in the US. Bullish investors will see this as a sign James Hardie has more runway left.
Other investors may point to the company’s rather stretched trailing P/E ratio of 61.
For reference, fellow building materials company Brickworks Ltd [ASX:BKW] has a trailing P/E ratio of 12.
That said, RBC analyst Paul Quinn thinks JHX shares still have upside, setting a 12-month price target of $54 on the stock.
Of course, another thing to consider with James Hardie is its dividends. The company today said its FY2021 special dividend and ‘future dividends will be unfranked for Australian taxation purposes.’
Some income investors may be disappointed that future dividends will be unfranked.
But that doesn’t mean there are no other dividend stocks out there paying franked dividends.
If you are looking to research dividend stocks further, then I recommend checking out our free Rum Rebellion 2021 dividend report.
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