Why experts rate the JB Hi-Fi share price a buy right now

Brokers currently like the JB Hi-Fi share price, here’s why.

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Key points

  • Multiple brokers think the JB Hi-Fi share price will keep on rising and rate the company a buy
  • JB Hi-Fi recently reported ongoing growth in the third quarter of FY22
  • Macquarie thinks JB Hi-Fi can continue to generate good earnings if the Aussie consumer is in good shape

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.

Buy ratings

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.

Motley Fool contributor Tristan Harrison 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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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