Down 40%: Are JB Hi-Fi shares a bargain buy?

JB Hi-Fi Ltd (ASX: JBH) shares had a tough time on Wednesday.

The retail giant’s shares ended the day 7% lower following the release of a trading update.

This means its shares are now down 40% from their 52-week high of $121.00.

Does this make JB Hi-Fi shares a bargain buy? Let’s see what Bell Potter is saying.

Are JB Hi-Fi shares a bargain buy?

Bell Potter notes that JB Hi-Fi’s trading update suggests that the key JB Hi-Fi Australia business is performing in line with its expectations in FY 2026.

The same cannot be said for The Good Guys business, which “saw some easing in growth at 2.5% and came in slightly below BPe.”

In response, the broker has made some small revisions to its revenue and earnings expectations. It explains:

We make changes to our revenue assumptions factoring in the GG and e&s performance in the trading update and accounting for some easing within our JBH Aus comparable sales in meeting the current challenging 4Q26 comps. The key division would cycle +8.2% comparable sales during the seasonal quarter and our revised estimates see +1.8% for 4Q26e and +2% for 2H26e and +3% thereafter.

We also apply some conservatism through our FY27/28e forecasts to see market share retention offset by some investment in gross margins, hovering around the 22% level for the overall business and a broadly flat CODB % of sales, with operating margins improving from a low point in FY27e. The net result sees our NPAT forecasts -1%/- 3%/-3% for FY26/27/28e.

Should you invest?

Bell Potter continues to see value in JB Hi-Fi shares at current levels.

It has responded to the update by retaining its buy rating on the retailer’s shares with a trimmed price target of $87.00 (from $90.00).

Based on its current share price of $72.98, this implies potential upside of 19% for investors over the next 12 months.

In addition, the broker expects dividend yields of 4.5% in FY 2026, 4.6% in FY 2027, and 4.9% in FY 2028. This stretches the total potential return beyond 23%.

Bell Potter thinks JB Hi-Fi shares are good value at 17x estimated FY 2026 earnings. It said:

Our PT decreases by ~3% to $87.00 (prev. $90.00) driven by our modest earnings revisions (BPe below Cons), skewed to FY27/28e. While we expect the overall Consumer Discretionary sector to remain challenged through CY26, our preference for JBH is supported by our view as semi-discretionary characteristics seen in the name and ability to maintain market share over a longer-term vs smaller competitors as short term product challenges are mitigated through 4Q26. Trading at ~17x FY26/27e P/E (BPe), we see valuation support and maintain our BUY rating.

The post Down 40%: Are JB Hi-Fi shares a bargain buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.