JB Hi-Fi (JBH) – Strong but Pricey Performer

JB Hi-Fi retails home consumer electrical products and white goods. The company operates through three segments: JB Hi-Fi Australia, JB Hi-Fi New Zealand, and The Good Guys.

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Ord Minnett recently updated its JB Hi-Fi (JBH) model to incorporate the latest trading data from the holiday season and commentary from suppliers and other retail industry players. Our view is that JB Hi-Fi has continued to win market share from rivals such as Harvey Norman (HVN), and we expect the pace of like-for-like (LFL) sales growth in the dominant JB Hi-Fi Australia division has picked up to 7% in the December quarter from 5% in the September quarter, while The Good Guys operations are likely to have maintained a LFL sales growth rate of 5%.

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Our estimates now incorporate annual special dividends of$1.20–1.80 per share out to FY30, or around $28 per share over that period. Despite JB Hi-Fi’s many attractive characteristics, we maintain our Lighten recommendation on the stock on valuation grounds. Our price target rises to $85.00 from $71.00, however, to account for our upgrades to earnings estimates.