Is today a good day to buy JB Hi-Fi Limited?

Could the market have overreacted to the full year results of JB Hi-Fi Limited (ASX:JBH)?

| More on:
a woman

What: Discount electronics retailer JB Hi-Fi Limited (ASX: JBH) has seen its share price hammered today after it released its results for the year ended 30 June 2014. The shares fell 8.4% to a low of $17.74 before recovering marginally to $17.95. In contrast, the S&P/ASX 200 Index (INDEXASX: XJO) has risen 0.6% for the day.

So What: The retailer reported sales of $3.48 billion, an increase of 5.3% compared to the prior year, as well as a net profit of $128.4 million, up 10.3% compared to 2013. The result was also bolstered by improving costs and profit margins. Meanwhile, earnings per share (EPS) beat consensus forecasts to grow 9.1% to 128.4 cents per share (cps), while the full year dividend rose to 84 cps, up from 72 cps a year ago.

Despite the strong full year result however, investors were more focused on comments that related to more recent sales. The company said that same store sales were down by 5.5% in July due to a slide in sales of tablet computers such as iPads – a trend which they believe will continue for the remainder of the first half.

Now What: Given how volatile the Australian market has been in recent times, it’s not surprising to see the market react so strongly to poor results or weak outlooks. It is possible that today’s share price movement could be a bit of an overreaction, particularly with the retailer announcing that “a good pipeline of new products is expected to drive solid sales growth for FY15 (regardless of July’s decline)”.

The opening of eight new stores in FY15 should help the company achieve sales of $3.6 billion, which represents a 3.4% increase from last year’s figures.

A better bet than JB Hi-Fi Limited

JB Hi-Fi is a great Aussie business and offers significant upside for long-term focused investors thanks to its 4.7% fully franked dividend yield as well as its new ‘Home’ format stores.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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

More on ⏸️ Investing