The JB Hi-Fi Limited (ASX: JBH) share price is currently rated a buy by multiple brokers.
As investors, it can be worth paying attention to a potential opportunity if more than one analyst thinks that the business is a buy.
JB Hi-Fi is one of the largest retailers in Australia. It operates three different businesses – JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.
While the business has seen growth since the onset of the COVID-19 pandemic, the company is rated as a buy by analysts that think the JB Hi-Fi share price can keep rising.
One of the latest brokers to rate JB Hi-Fi as a buy is Macquarie. It currently has a price target of $57.80 on the company. That implies a potential rise of around 25% over the next year if the broker is right.
One of the main things that Macquarie noted was a recent trading update which showed growth from JB Hi-Fi. The broker thinks that JB Hi-Fi can continue to benefit from the consumer being in good shape.
Looking at that update for the third quarter of FY22, JB Hi-Fi said that total JB Hi-Fi Australia sales were up 11.9% year on year, JB Hi-Fi New Zealand sales were up 4.8% in New Zealand dollars and The Good Guys sales increased by 5.5%.
That brought the total year-to-date figures to a growth of 1.9% for JB Hi-Fi Australia and 1.1% growth for The Good Guys. However, JB Hi-Fi New Zealand sales were down 1.8% for the nine months to 31 March 2022.
Another broker that currently rates JB Hi-Fi as a buy is Credit Suisse, with a price target of $60.08. That implies a possible rise of the JB Hi-Fi share price of around 30%.
Sizeable dividends expected
Both of these brokers think that JB Hi-Fi is going to pay a fairly substantial dividend in FY22 and again in FY23.
According to Macquarie, JB Hi-Fi could pay a grossed-up dividend yield of 8.2% in FY22 and 7.6% in FY23.
Credit Suisse has estimated that JB Hi-Fi is going to pay a grossed-up dividend yield of 8.5% in FY22 and then 6.6% in FY23.
JB Hi-Fi share price valuation
While both brokers may rate the business as a buy, they have different projections on how much net profit after tax (NPAT) the company is going to generate in FY22 and FY23, leading to different forward price/earnings (p/e) ratio estimates.
Using Macquarie’s numbers, the JB Hi-Fi share price is valued at 11x FY22’s estimated earnings and 12x FY23’s estimated earnings.
Credit Suisse’s projections put JB Hi-Fi shares at 11x FY22’s estimated earnings and 14x FY23’s estimated earnings.