Is JB Hi-Fi a buy, sell or hold following its half-year result?

Shares in JB Hi-Fi Ltd (ASX: JBH) found some support on Monday after the company released its results, and it’s not hard to see why.

The electronics and homewares retailer posted a 7.3% increase in sales to a record $6.1 billion net profit was up 7.1% to $305.8 million and the interim dividend was boosted by a massive 23.5% to 210 cents per share.

Chief executive officer Nick Wells said the company was building on the momentum of the previous year.

He added:

In a retail environment where customers are seeking value, our brands continue to resonate strongly and our teams continue to execute to a high standard.

On trading to date this calendar year JB Hi-fi Australia sales were up 2.4%, JB Hi-Fi New Zealand were up 16.7% and The Good Guys were 2.7% higher.

Mr Wells did strike a note of caution about the outlook however, saying:

Whilst we are pleased to see sales growth continue in January in JB Hi-Fi and The Good Guys, cycling strong sales in the prior year, we remain cautious given the uncertainty in the retail market and the continued competitive activity. As always, we will remain focused on maximising demand through driving great value for our customers and delivering consistently high levels of customer service.

Shares looking cheap?

So what do the analysts think? It’s fair to say there’s a range of opinions, with Macquarie quite bullish on the outlook for JB Hi-Fi shares.

Macquarie has a 12-month price target of $106 compared with $82.40 currently, which would represent a total shareholder return of 33.3% if achieved once dividends are factored in.

The Macquarie team said they believed “concerns by the market are over-played” and they still saw tailwinds for the shares including ongoing tech upgrade cycles.

 They added:

With industry anecdotes continuing to point to rising competition in key promotional periods, especially “Black November”, there was continued evidence of JBH’s strong market position. In the key JB AU segment, which is likely the largest participant in these promotional-heavy periods, gross profit margins expanded … evident of solid execution and supplier contributions.

The analyst team at Citi still has a buy rating on JB Hi-Fi shares, but did downgrade its price target from $110 to $100.

They said they were “positively surprised” by the gross profit margins for JB Hi-Fi and The Good Guys, and they believed major downgrades were unlikely in the future, going on past performance where that had only happened once in 15 years.

 And finally, the analyst team at Morgans have rated JB Hi-Fi shares a hold, with a price target of just $87, lowered from $95.

The Morgans team said this week’s profit was a “solid” result from the company which was the market leader in its field, however they reduced their assumptions about earnings going forward due to lower sales growth expectations.

The post Is JB Hi-Fi a buy, sell or hold following its half-year result? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.