The JB Hi-Fi Ltd (ASX: JBH) share price fell heavily yesterday, dropping below $70 within the first hour. After a sizeable drop, I think the ASX retail share is now a compelling long-term buy.
There were warning signs of a difficult FY27 with how its trading started in July 2026. JB Hi-Fi Australia sales were down 0.5%, The Good Guys sales decreased 1.7% and E&S sales fell 2.7%. The only positive was JB Hi-Fi New Zealand sales grew 20.9%, though this division only generates a fraction of what the company makes in Australia.
Despite the difficulties, I think there are multiple positives to focus on for the longer-term.
Image source: Getty Images
Much better valuation
One of Warren Buffett's most famous pieces of advice is "be fearful when others are greedy and greedy when others are fearful".
While JB Hi-Fi didn't exactly crash yesterday, it was still a large decline. When added to the rest of the fall over the past 12 months, it's down nearly 40% in the past year (at the time of writing).
I'd suggest the business is now more likely to deliver capital growth over the long-term because we can invest with a much larger margin of safety. In my view, it can only fall so far during this period, and a share price usually bottoms out before that deterioration shows up in the financials.
At the time of writing, JB Hi-Fi is now trading at 16x FY26's earnings. I think that's a good earnings multiple to invest. If it went even cheaper, I'd suggest it'd be an even better buy.
Significant boost to the available passive dividend income
In the company's FY26 result, the business reported earnings per share (EPS) grew 5.9% to $4.48 and the dividend per share was hiked by 22.5% to $3.37 per share.
The dividend payout ratio was approximately 75%, which I think is a healthy level that both rewards shareholders and allows for reinvestment.
Following the sizeable fall of the JB Hi-Fi share price, the dividend yield has seen a significant increase.
Based on the FY26 payout, the company now has a grossed-up dividend yield of 6.7%, including franking credits, at the time of writing.
Leading retailer
During periods of economic weakness, I believe leading businesses are more likely to improve their market share and/or operations.
The company has a few areas of focus.
JB Hi-Fi said it's going to focus on providing customers with low prices, best-in-market promotions, and winning at key sales events. It also wants to provide a better service and in-store experience. It's also looking to drive operational efficiencies such as rolling out electronic shelf labels.
The company is also looking to open four new JB Hi-Fi Australia stores, two JB Hi-Fi New Zealand stores and one new The Good Guys store in FY27, as well as enact store relocations and extensions.
It's also planning to expand its in-store retail media screen network, grow its membership programs, provide AI shopping experiences and search online, and grow its online, phone and chat sales channels.
The ASX share also has plans to improve the recently acquired E&S business with a new website, expand its commercial business outside of Victoria, improve business operations, develop a new store layout and grow its store network.
Overall, I think the business has a very promising future, which is why I'd be very happy to invest at the current JB Hi-Fi share price.
