What’s happening with the JB Hi-Fi Share Price?

What happened to the JB Hi Fi share price?

JB Hi-Fi Limited [ASX:JBH] is a speciality discount retailer of branded electronic goods, home entertainment, software and in 56 of their 194 locations called HOME stores, they sell home appliances. They have a total of 8 new stores planned to open through the 2016 financial year.

Shares of JB Hi-Fi were down 4 cents to $24.34 at the time of writing.

What now for JB Hi-Fi Ltd?

From March to early May this year, JBH share price hovered either side of $23.

Come 4 May, that changed and JBH pushed up through $24 for the first time ever.

What happened?

JBH shared their third quarter financial results. And they look promising.

While like for like sales were up 5.2% for the quarter, more importantly the company are on track to meet previous end of financial year estimates.

JBH confirmed total revenue will reach $3.9 billion, and net profit will be in the $143–147 million mark.

The dividend for the 2015 financial year was 90 cents. It’s likely the full year dividend will increase in 2016, as the interim dividend was 63 cents per share.

The chain store has a solid history of both total revenue and NAPT increasing each year, and of growing their dividend payments.

The FY15 outlook was $3.6 billion and NPAT was $127–131.0. Although total 2015 revenue fell short by $100 million, NPAT exceeded expectations at $136.5 million.

Since this announcement JBH shares have rallied 14%.

Given the history of increasing revenue and net profit, I expect to see more investors buying in to JBH chasing yield.

However, with the recent rally, does that mean all the good news is priced into JBH stock? Perhaps not.

The company keep store fit outs cheap – around $1–1.5 million — and are now only expanding into areas with limited competition such as Tasmania, central western NSW and parts of Western Australia.

JBH is taking over an old Supa IGA site in Dubbo, NSW.  Because of JBH’s store layout, it needs a large floorplan. The old supermarket is an ideal home for the electronics retailer.

According to the Mayor of Dubbo, Mathew Dickerson, roughly 130,000 locals and folks from nearby towns shop in Dubbo. How much this particular store will add to the bottom line of JBH, we don’t know. But the Dubbo Big W store is the third highest retailing store for Big W Australia.

In addition, JB Hi-Fi will open their first Tasmanian store in May this year. The Launceston shop will include a kitchen, laundry and home appliances, coupled with the standard electronic goods, software and home entertainment items.

Adding to the growth, JBH have a total target of 75 HOME stores, tapping into the $4.6 billion home appliances market in Australia.

On top of all that, basic technical analysis suggests that this stock is about to climb higher.

Get ready for the next leg up.

Shae Russell,
Money Morning

Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

Money Morning Australia