James Hardie Industries PLC (ASX: JHX) shares are storming higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) building materials company closed yesterday trading for $34.85. In earlier morning trade on Thursday, shares jumped to $37.89, up 8.7%. After likely profit-taking, shares are currently trading at $36.87 each, up 5.8%.

For some context, the ASX 200 is up 1% at this same time.

Today’s boost continues the strong upward trend for James Hardie shares since the recent lows in mid-May. Indeed, since market close on 18 May, the ASX 200 stock has gained an impressive 41.7%.

Here’s what’s stoking investor interest today.

James Hardie shares surge on Q1 guidance beat

James Hardie shares are outperforming today following the release of the company’s preliminary first-quarter FY 2027 results. ASX investors can expect to see the final audited results on 7 August.

As for the preliminary results, the company reported consolidated net sales of US$1.449 billion to US$1.475 billion. That result is being well received by the market today, as it is materially above Q1 sales guidance of US$1.315 billion to US$1.354 billion.

Earnings also topped expectations, with earnings before interest, taxes, depreciation and amortisation (EBITDA) ranging from US$399 million to US$407 million. That compares favourably to Q1 EBITDA guidance of US$354 million to US$375 million.

James Hardie’s Siding & Trim division performed strongly, achieving Q1 net sales of US$846 million to US$860 million. That also exceeds first-quarter sales guidance for the division of US$758 million to US$781 million.

In other core financial metrics, James Hardie reported preliminary consolidated GAAP net income for the quarter in the range of US$102 million to US$104 million.

What did management say?

Commenting on the results lifting James Hardie shares today, CEO Aaron Erter said, “Our first quarter results are expected to exceed our prior guidance, primarily as a result of better-than-expected sales in Siding & Trim”.

Erter continued:

Siding & Trim net sales reflected strong sell through and underlying demand for our products. Our performance in Deck, Rail & Accessories was driven by channel inventory normalization and sell-through that improved throughout the quarter.

First-quarter Deck, Rail & Accessories net sales came in at US$296 million to US$305 million.

Erter concluded:

We believe our performance reflects our team’s execution and growth above market, rather than a meaningful improvement in the overall US housing market. That said, we are encouraged by the positive traction from our initiatives to grow our fibre cement business, continued conversion in decking and the positive contribution from sales and cost synergies.

The post Why are James Hardie shares jumping 9% on Thursday? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares have climbed substantially over the past three months, but broker Morgan Stanley warns the rally could be overdone.

Where to now for the Wesfarmers share price?

The shares have improved from levels in the low $70 range in April and May to be changing hands for $89.90 now, up a modest 8.16% over the past 12 months.

But Morgan Stanley warns that the re-rating in discretionary spend stocks has “run ahead of fundamentals and is unlikely to prove durable”.

Looking at the consumer sector broadly, the broker has downgraded its industry view to cautious from in-line, “following capital gains tax and negative gearing changes and the expected drag on housing activity, wealth effects, sentiment, and discretionary spending”.

They said that since the announcement of the tax changes, their cautious view had not changed, and they see the risk of derating as high.

Sector-wide, Morgan Stanley said companies were trading at high multiples, not far off 10-year highs.

They added:

Historically, valuation premiums at these levels vs. the market have required either accelerating earnings estimate revisions or a supportive macro backdrop. We see neither today, suggesting that the risk/reward balance has become increasingly unfavourable ahead of reporting season.

The broker has downgraded Wesfarmers to underweight, “following a period of strong share price performance that has pushed the stock’s valuation ahead of the likely earnings trajectory”.

They added:

While we expect Kmart to be a beneficiary of trade-down and range expansion (K home), we expect a moderation vs. consensus expectations in Bunnings’ sales growth, given the emerging correction in domestic property markets. Bunnings remains a high quality business with strong market positioning, attractive returns on capital, and structural opportunities across range, digital, loyalty, and store productivity. However, near-term expectations appear demanding. The emerging correction in domestic property markets is likely to weigh on housing turnover and renovation-related expenditure, particularly in larger-ticket and project-led categories. Maintenance and repair demand should remain comparatively resilient, but we expect softer discretionary spending to result in sales growth below current consensus assumptions.

Kmart, on the other hand, should be a beneficiary of pressure on household budgets, Morgan Stanley said, as consumers seek greater value for money.

They added:

Ongoing range expansion, including K home, provides an additional avenue for category growth and market share gains. Nevertheless, expectations for Kmart are already elevated following several years of strong execution.

What share price to expect

Morgan Stanley slightly increased its price target for Wesfarmers shares, upping it from $78.70 to $79.

The broker is expecting the dividend yield to be 2.7% this year.

The post How much does Morgan Stanley think Wesfarmers shares will fall? appeared first on The Motley Fool Australia.

More reading

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• Up 29% since May, can Wesfarmers shares keep surging higher?
• How to build an ASX dividend portfolio that keeps paying you for decades
• Buy, hold, sell: SKS Technologies, Yancoal, Wesfarmers shares
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Motley Fool contributor Cameron England has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Santos Ltd (ASX: STO) share price is pushing higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $7.85. In early morning trade on Thursday, shares are swapping hands for $7.94 apiece, up 1.1%.

For some context, the ASX 200 is up 1% at this same time.

The Santos share price should be catching some tailwinds today from another overnight rise in the oil price.

Amid ongoing fighting in and around Iran and new Yemeni Houthi attacks on oil tankers in the Red Sea, the Brent crude oil price is up 3.4% overnight to US$94.07 per barrel, according to Bloomberg data. That now sees the oil price up more than 31% since the beginning of July.

Here’s what else investors are mulling over today.

Santos share price stalls on cash flow stumble

Before market open this morning, Santos released its June quarter update (Q2 FY 2026).

The Santos share price is on the rise, with the company reporting a 6% quarter-on-quarter increase in sales revenue to $1.35 billion.

The revenue boost was fuelled in part by a 3% increase in Q2 production, which came out at 23.1 million barrels of oil equivalent (mmboe). That brings Santos’ H1 production to 45.6 mmboe.

And with management forecasting a 20% to 30% boost in H2 production levels, Santos narrowed its full-year FY 2026 production guidance to the range of 99 mmboe to 105 mmboe.

Santos also enjoyed a 4.9% quarter-on-quarter rise in its average realised LNG pricing, which increased to $11.21 per mmBtu.

However, investors look to have some concerns over the company’s cash flow.

Impacted by “challenges” during the final stages of commissioning and ramp up at the Barossa and Pikka projects, and the timing of cargo movements, free cash flow from operations in the first half of FY 2025 was lower than expected at $378 million.

Barossa and Pikka together recorded a combined free cash flow from operations loss of around $151 million for the first half.

The company said that higher realised LNG pricing, along with the expected production uplift, should improve free cash flow in the second half of 2026.

What did management say?

Commenting on the results that could be holding the Santos share price back from larger gains today, managing director Kevin Gallagher said:

Production increased towards the end of the second quarter as Barossa ramped up and Pikka came online, with Barossa now producing at 97% of planned rates. The challenges encountered during commissioning activities have essentially delayed our transition to a higher production, higher cash flow generating portfolio, until the second half of the year…

Gallagher added:

2026 was always going to be a transition year for Santos with two major development projects coming online and significant commissioning activities to be completed before establishing steady-state performance at both assets.

And for passive income investors awaiting the upcoming Santos dividend, Gallagher noted:

The board will consider the timing of expected cash flow over the full year in determining the amount of the interim dividend, with first-half free cash flow impacted by a number of timing items that are not reflective of the company’s underlying cash flow capacity.

The post Why is the Santos share price lifting off on Thursday? appeared first on The Motley Fool Australia.

More reading

• Santos reports higher Q2 revenue as Barossa, Pikka ramp up
• 5 things to watch on the ASX 200 on Thursday
• The Santos share price is in the spotlight this week. Here’s why
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.