The JB Hi-Fi (ASX: JBH) share price has gone up around 6% after giving its first quarter trading update.
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 Reveals More Growth
JB Hi-Fi is currently holding its annual general meeting (AGM) today where the CEO and Chairman give their speeches to shareholders, where they review the progress in FY19 and look to FY20.
As part of the AGM the management gave a sales update for the first quarter of FY20.
Total sales growth for JB Hi-Fi Australia in the first quarter was 4.7% with comparable sales growth of 3.7%.
JB Hi-Fi New Zealand achieved total sales growth of 3.8% with comparable sales growth of 3.8%.
The Good Guys saw total sales decline by 0.5% with comparable sales declines of 1.8%.
Obviously revenue performance is different to profit growth, so we’ll have to wait to see if sales growth translates to profit growth.
JB Hi-Fi Guidance
In FY20 the company still expects total sales of around $7.25 billion, which would be an increase of about 2.1%. This total is comprised of guidance of sales of $4.84 billion from JB Hi-Fi Australia, NZ$0.24 billion from New Zealand and $2.18 billion from The Good Guys.
Is The JB Hi-Fi Share Price A Buy?
Continuing sales growth is impressive considering all of the growth that the company has already achieved over the past decade. I think it’s particularly good in the context of how cautious the Australian consumer is being at the moment.
Volume growth / economies of scale is important for growing profit margins, but it will be interesting to see at the half year result whether this sales growth has come at the cost of margins.
According to Commsec, JB Hi-Fi is trading at 17 times the estimated earnings for this (2020) financial year. I don’t think JB Hi-Fi is a buy today because its share price has performed so strongly in 2019, it looks a little expensive.
For blue chip growth I would rather buy the shares in the free report below.
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