James Hardie Industries heads into its August 18 earnings release with the most striking story sitting not in the options market, but in a dramatic retreat by short sellers over the past two weeks.
Short interest has collapsed nearly 40% in a single week — from roughly 18.4 million shares to just over 11.3 million. That move coincides with a 20% surge in the stock price over the past month to $31.04, and together they paint a picture of shorts being squeezed or capitulating ahead of the print. The borrow market confirms there is no meaningful pressure left: availability is exceptionally loose at 1,270% — roughly twelve shares available to borrow for every one already shorted — and borrowing costs have dropped 21% over the week to a negligible 0.36% annualised. The short score has followed suit, easing from the high 30s to 32.3, reflecting a less convicted short-side community. This is not a crowded-short setup.
Options traders are similarly unbothered. The put/call ratio of 0.37 is almost exactly in line with its 20-day average and barely a tenth of a standard deviation below it, meaning there is no detectable rush to buy downside protection ahead of the release. The ratio has held in a tight band since late July — a striking absence of pre-earnings hedging activity from a market that has clearly been watching the stock rally hard.
The bull case has gathered real momentum in the data. Forward EPS estimates rank in the 87th percentile for year-on-year growth, and the 30- and 90-day EPS momentum scores both run above the 75th percentile — suggesting the analyst community has been consistently lifting its earnings forecasts heading in. The analyst recommendation differential ranks in the 94th percentile, pointing to a meaningfully more bullish consensus than the broader market. The PE multiple has expanded roughly three points over the past month to around 20.5x as the stock re-rated, which is no longer cheap but not stretched for a business with improving forward earnings visibility. The bear case rests on that valuation re-rating and a construction cycle that remains uncertain: softer residential starts in North America have been a persistent overhang, and the EV/EBITDA multiple of 13x has compressed over one point in the past month — the market pricing in some earnings upside while remaining alert to any guidance disappointment.
History offers a constructive reference point. The most recent prior print, in early August, produced a one-day gain of 6.6% and a five-day move of nearly 9%. The print before that delivered a similar five-day return. The question on August 18 is whether James Hardie's North American volumes and margins can justify the stock's sharp pre-earnings re-rating, or whether the rally has pulled too much forward.
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