Can you benefit from JB Hi-Fi Limited’s $27.2m buyback?

The company has proven itself to be one of Australia’s best retailers – but is it too late to profit?

a woman

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Australia’s favourite consumer and electronics business JB Hi-Fi Limited (ASX: JBH) just got even better.

In addition to delivering a trading update which forecast net profit after tax (NPAT) of between $126 million and $129 million (an increase of between 8.3% and 10.8% on the prior year), it also announced a share buyback worth a total of $27.2 million. The buyback of 1.4% of its total shares on issue is aimed at offsetting the dilutionary impact of shares issued in FY14 for the exercise of employee share options.

The move also comes as a sign that the company is not interested in any near-term acquisitions. Instead, it will continue to focus on rolling out its Home stores with the expectation of having opened 22 stores of this format by the end of the fiscal year. The number of Home stores could increase to as many as 75 by the end of 2016 which will come into direct competition with other companies like Harvey Norman Holdings Ltd (ASX: HVN).

JB Hi-Fi’s shares rose 2.8% on Friday following the news and have climbed almost 13% over the last 12 months. This compares to the S&P/ASX 200 Index’s (Index: ^AXJO) (ASX: XJO) 4.9% gain and the 2% loss posted by Dick Smith Holdings Limited (ASX: DSH) since it first listed in December last year.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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