Stock Analysis

JB Hi-Fi Limited (ASX:JBH) Just Reported Half-Yearly Earnings: Have Analysts Changed Their Mind On The Stock?

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It's been a good week for JB Hi-Fi Limited (ASX:JBH) shareholders, because the company has just released its latest half-year results, and the shares gained 8.7% to AU$53.31. JB Hi-Fi reported in line with analyst predictions, delivering revenues of AU$4.9b and statutory earnings per share of AU$2.50, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on JB Hi-Fi after the latest results.

See our latest analysis for JB Hi-Fi

ASX:JBH Earnings and Revenue Growth February 17th 2022

Following last week's earnings report, JB Hi-Fi's 16 analysts are forecasting 2022 revenues to be AU$8.84b, approximately in line with the last 12 months. Statutory earnings per share are forecast to decrease 4.8% to AU$3.94 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$8.76b and earnings per share (EPS) of AU$3.76 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of AU$53.35, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic JB Hi-Fi analyst has a price target of AU$69.00 per share, while the most pessimistic values it at AU$32.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that JB Hi-Fi's revenue growth is expected to slow, with the forecast 0.2% annualised growth rate until the end of 2022 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than JB Hi-Fi.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards JB Hi-Fi following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that JB Hi-Fi's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for JB Hi-Fi going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for JB Hi-Fi (1 shouldn't be ignored!) that you need to be mindful of.

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