The JB Hi-Fi Limited (ASX: JBH) share price could be one to watch today after it reported its FY19 result.

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 Solid FY19 Result

The electronics store retailer reported that its total sales increased by 3.5% to $7.1 billion. JB Hi-Fi Australia reported comparable sales growth of 2.8%, JB Hi-Fi Zealand had comparable sales growth of 8.2% and The Good Guys had comparable sales growth of 0.9%.

Impressively, the company managed to increase its EBIT (click here to learn what EBIT means) profit margin from 5.11% to 5.25% despite the growing presence of Amazon. JB Hi-Fi attributed the margin improvement to cost control, lower depreciation and managing its investment in the store network.

JB Hi-Fi’s net profit after tax (NPAT) grew by 7.1% to $249.8 million and profit/earnings per share (EPS) increased by 7.1% to 217.4 cents per share. According to CommSec and Bloomberg, the market was expecting the company to report a profit of $243.3 million, so it appears to beaten estimates.

In terms of store numbers, JB Hi-Fi Australia added three stores to 196, the New Zealand division saw a fall of one to 14 and The Good Guys added two stores to the network.

JB Hi-Fi Dividend And Balance Sheet

The JB Hi-Fi Board decided to declared final dividend of 51 cents per share, bringing the total year dividend to 142 cents per share, an increase of 10 cents or 7.6%.

The 65% dividend payout ratio provides a balance between distribution of profit, the repayment of debt and re-investment of earnings for future growth according to the Board.

That’s how JB Hi-Fi was able to reduce net debt over the year from $397.4 million at June 2018 to $319.9 million at June 2019.

Is JB Hi-Fi A Buy?

In FY20 the company is expecting total sales to come in at around $7.25 billion, which would be an increase of around 2.1%.

In the first few weeks of FY20, the company has seen sales growth of 4.1% and comparable sales growth of 3.2% at JB Hi-Fi Australia, a sales decline of 2.1% and comparable sales decline of 3.4% at The Good Guys and a slight sales decline in the New Zealand division.

It might be a tough year for JB Hi-Fi. I must say I’ve been impressed by JB Hi-Fi’s ability to grow profit over the past couple of years. But I’m not confident about whether that can continue, even at only 13 times the profit reported for the 2019 financial year. I’d rather buy shares of the reliable businesses in the free report below instead.

Finding ASX shares offering exceptional long term growth and dividends over 3% is rare. Fortunately, the Rask Group's top expert investment analyst has released a FREE investing report which reveals proven ASX shares.

These three companies have proven themselves to be reliable dividend + growth shares over a decade. Click here to get instant access to his report.

Past performance is not indicative of future performance but as he says in his report, there are many reasons to keep a close watch on these 3 shares in 2019 and beyond.

Absolutely no credit card details or payment required.


Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.