The JB Hi-Fi Limited (ASX: JBH) share price has been one of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) over the last 12 months.
Since this time last year the retailer’s shares have gained a sizeable 52%. This strong form has continued on Thursday, with the JB Hi-Fi share price hitting a record high of $46.30 earlier today.
Investors appear confident that the company will deliver a strong full year result when it hands in its report card on 17 August.
Ahead of the results release, I thought I would take a look to see what the market is expecting from the company.
What is expected from JB Hi-Fi in FY 2020?
According to a note out of Goldman Sachs, it expects JB Hi-Fi to deliver group sales of $8,026.6 million in FY 2020. This is 2.1% ahead of the company’s guidance of $7,860 million and up 13.1% year on year.
In respect to earnings, the broker is forecasting earnings before interest and tax (EBIT) of $519.6 million or $502.5 million on a pre-AASB16 basis. This represents impressive year on year growth of 34.8%.
What will be the drivers of this growth?
The JB Hi-Fi Australia business is expected to contribute EBIT of $408.6 million for the year. Goldman expects this to be driven by like for like sales growth of 13%, the addition of three new stores, and a 100-basis point increase in its EBIT margin.
Elsewhere, the broker is forecasting The Good Guys business to deliver EBIT of $115.9 million. This will be a 51.9% increase on the prior corresponding period. Goldman expects this to be driven by a 12% increase in like for like sales and EBIT margin expansion of 115 basis points.
Not all of its businesses are expected to deliver earnings growth. Goldman Sachs expects the JB Hi-Fi New Zealand to drag on its performance slightly with a $5.4 million loss.
Should you invest?
Goldman Sachs appears to believe the JB Hi-Fi share price has peaked now and has given it a neutral rating with a $44.40 price target.
It prefers rival Harvey Norman Holdings Limited (ASX: HVN) and has a buy rating and $4.60 price target on the retailer’s shares. This compares to its current share price of $3.58.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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