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Why the James Hardie Industries plc share price stormed higher today

The James Hardie Industries plc (ASX: JHX) share price has been amongst the best performers on the market in morning trade.

At the time of writing the building products company’s shares are up 4.5% to $19.80.

Why are its shares higher?

This morning James Hardie Industries released its first-half update which came in ahead of expectations.

Last week a research note out of Ord Minnett revealed that its analysts were expecting an underlying net profit of US$66.1 million in for the second-quarter of FY 2018.

But the company ended up delivering a net profit of US$66.4 million during the second-quarter, bringing its first-half net profit to US$123.8 million. While this was a disappointing 14% lower than the first-half of FY 2018, the market had braced itself for worse.

Playing a key role in the improved performance was its North America Fiber Cement segment. It delivered a much-improved EBIT margin of 24.5% during the quarter, compared to 20.3% in the first-quarter.

Another driver was the performance of its International Fiber Cement business. Net sales increased 16% during the second-quarter and 12% for the first-half due to volume increases in Asia Pacific markets.

Pleasingly, management remains confident that the business performance will continue to improve as the year goes on, ultimately leading to a much stronger second-half.

As a result, it expects full year adjusted net operating profit to be between US$245 million and US$275 million, compared to analyst forecasts of between US$251 million and US$279 million.

Though it does caution that although U.S. housing activity has been improving, market conditions remain somewhat uncertain and some input costs remain volatile.

Should you invest?

Things do look to be improving for James Hardie Industries and it could prove to be a good investment, but I don’t believe there is a sufficient margin of safety at the current share price.

In light of this I would sooner invest in Boral Limited (ASX: BLD) shares which I think are better value for money at present.

Alternatively, these dividend shares could be even better options at the moment.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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