Why Is the JB Hi-Fi Stock So High?

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 and software. And, in 56 of their 194 ‘HOME’ branded stores, they sell home appliances. They have a total of eight new stores planned to open throughout the 2016 financial year.

Shares of JB Hi-Fi were up 6.28%, to $29.10, at the time of writing.

Why did this happen to JB Hi-Fi?

The meteoric share price rise from JB Hi-Fi this morning came on the back of spectacular 2016 financial year earnings.

Total sales for the year were up 8.4%, to $3.95 billion. Net profit rose $152.3 million, up 12%, and the final dividend was 37 cents — bringing the total dividend to $1.00 for the year, up from 90 cents in 2015.

In addition to this, JBH has confirmed it will extend its share buyback program, buying as many as 400,000 shares throughout the 2017 financial year.

The company will open another seven new stores over the next 12 months. Furthermore, five existing stores will be converted to HOME appliance shops in the same period.

JB Hi-Fi reads the marketplace well, and they continue to expand their product range.

JB Hi-Fi product expansion, 2014–16


Source: JB Hi-Fi 2016 Presentation
Click to enlarge

What now for JB Hi-Fi Ltd?

The strong dividend will attract more investors if the Reserve Bank of Australia continues to cut interest rates this year.

JBH continues to beat shareholders’ expectations. And extending their share buyback program tells investors that management is willing to invest in the company. I wouldn’t be surprised to see the stock sell off for the rest of August once this results based rally is over.

In saying that, JBH is well placed to move past, and stay at, $30 per share by the end of the year.

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 Fat Tail Investment Research 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