How will the closure of the AZEK acquisition impact James Hardie's revenue growth and profit margins for FY26?

Fundamental impact

The FY‑26 guidance now explicitly incorporates the closed AZEK acquisition, which adds roughly US$1.0 billion of annual net revenue (the size of AZEK’s 2024 sales) to James Hardie’s topline. Management therefore expects mid‑single‑digit to low‑double‑digit revenue growth for the year, versus the 3‑4 % organic growth it was previously forecasting. The acquisition is also “earnings‑neutral” in the short‑run: the incremental cost of goods sold and SG&A associated with AZEK will be largely offset by the higher gross margin profile of its product mix, but the integration‑related expenses (systems harmonisation, head‑count rationalisation, and logistics realignment) will shave ≈30–40 bps off the FY‑26 adjusted EBITDA margin versus a pure‑organic scenario. Once the integration is complete (late FY‑27), the combined entity should see margin expansion of 150–200 bps as the higher‑margin AZEK portfolio is fully absorbed and cost synergies materialise.

Trading implications

• Near‑term catalyst: The updated guidance already priced in the acquisition, so the market has partially digested the upside. However, the margin‑compression signal is a fresh downside risk that the market may not have fully priced. Expect a modest sell‑pressure on the next 2‑4 weeks if the market perceives integration costs to be higher than the 30 bps estimate.
  
• Medium‑term upside: Assuming the company delivers the projected 5‑6 % top‑line growth and recovers the margin dip by FY‑27, the stock could trade at a 12‑15 % premium to current levels (≈12‑month forward EV/EBITDA multiple of 9‑10× versus the 8× historical average). A long‑position with a 12‑month horizon is justified, with a stop‑loss around 8 % below the current price to guard against any further inventory‑drain volatility.
  

In short, the AZEK close lifts FY‑26 revenue growth expectations but temporarily compresses profit margins; investors should price‑in a short‑term margin‑drag while keeping a bullish stance on the longer‑term margin expansion and earnings uplift.