JB Hi-Fi Limited (ASX: JBH) has reported its half year report to 31 December 2018, is it a buy?
JB Hi-Fi is one of Australia’s largest device and home appliance retailers with its network of The Good Guys and JB Hi-Fi stores. JB Hi-Fi was established in 1974 by Mr. John Barbuto (JB), trading from a single store in East Keilor, Victoria.
JB Hi-Fi’s Half Year Report
The electronics retail reported that total sales grew by 4.2% to $3.8 billion. The key JB Hi-Fi Australia segment grew sales by 4.7% to $2.59 billion, with comparable sales up by 3%. Impressively, online sales increased by 21%.
JB Hi-Fi New Zealand sales increased by 5.8% to NZ$131.8 million with comparable sales of 12.6%. The Good Guys total sales increased by 2.8% to $1.13 billion with comparable sales growing by 1.5%.
Group EBIT increased by 4.8% to $236.6 million thanks to an improvement in profit margins at JB Hi-Fi Australia (click here to learn what EBIT means).
Group net profit after tax (NPAT) grew by 5.5% to $160.1 million. This resulted in earnings per share (EPS) increasing by 5.4% to 139.4 cents.
JB Hi-Fi Dividend
The company has decided to pay an interim dividend of 91 cents per share, which is a 5.8% increased compared to last year. This represents a payout ratio of 65% of net profit.
Market Expectations
According to Bell Potter, the market consensus expectations were for a net profit of $154 million, so compared to JB Hi-Fi’s result of $160.1 the company appears to have materially beaten the expectations.
JB Hi-Fi Management Comments
The CEO of JB Hi-Fi, Richard Murray, said: ““In a competitive environment we remained focused on sales and market share whilst continuing to evolve the business.”
JB Hi-Fi Trading Update And Outlook
In January 2019 the company said that JB Hi-Fi Australia had achieved sales growth of 3% with comparable sales growth of 1.5%.
For the rest of FY19, the company expects total sales to be $7.1 billion and group profit to be in the range of $237 million to $245 million, which would represent growth of 1.6% to 5.1%.
Is JB Hi-Fi A Buy?
I continue to be impressed by JB Hi Fi’s ability to keep growing sales and profit despite a very tough retail environment with falling house prices and more competition, particularly from online players like Amazon.
With a fully franked dividend yield of 6%, JB Hi-Fi is potentially a contrarian investment idea. But with profit growth clearly slowing, it’s not the type of investment I’m drawn to.
3 Shares That Could Be Better Picks Than JB Hi-Fi
In this environment I would rather choose proven shares with long term profit growth, such as the businesses in the free report below.
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