The purpose of this report is to evaluate the findings of an analysis conducted on JB Hi-Fi (JBH). This evaluation will be assessed to present a recommendation to acquire shares to add to an investment portfolio. This report will assess JBH relative to profitability, asset efficiency, liquidity, capital structure and market performance, before conducting a forecast and risk analysis. Annual reports from the past three years and analysts published views were used as the basis for the final recommendation. These evaluations will show JB Hi-Fi to be a strong investment opportunity.
Table of Contents
JB Hi-Fi Company ProfilePage 2
Financial AnalysisPage 3
• Profitability AnalysisPage 3
• Asset Efficiency AnalysisPage 5
• Liquidity AnalysisPage 6
• Capital Structure AnalysisPage 7
• Market Performance AnalysisPage 8
• Forecast & Risk AnalysisPage 9
Conclusion And RecommendationsPage 10
This report will deal exclusively with the assessment and evaluation of JB Hi-Fi (JBH) as an investment. It is part of a group of reports compiled to evaluate a list of possible investment opportunities in the discretionary consumer retail industry. The other companies that are evaluated in this group include: David Jones, Harvey Norman, The Reject Shop and Clive Peters. Each of these companies are listed on the ASX and retails to its own distinctive target market. The decision to invest in one of these companies does not exclude the decision to also invest in one or more of the other companies. The report seeks to evaluate and analyze each of these companies from a financial, risk and investment point of view. The analysis will seek to determine which companies are acceptable as an investment in terms of its: 1. Finances (Sound profitability, efficiency, liquidity, and capital structure), 2. Value (Acceptable costs and returns relative to the market and peers) and, 3. Risks (Organisational stability and future growth prospects)
The investment period is 20 Years.
JB Hi-Fi (JBH) Company Profile
JB Hi-Fi Limited (JBH) is a specialty discount retailer of branded home entertainment products. The Group's products fall in into consumer electronics, car sound systems, music, DVDs and white goods. JBH does not operate a warehouse; instead all stock is delivered directly to each retail outlet and largely stored on the shop floor. JBH uses its size and mix of high growth categories to increase its buying and advertising synergies. They are focused on growth, opening 39 stores in the past 2 years and a securing another 18 sites set to open in the 2009/2010 fiscal year. As of the 30th of June 2009, the company had 123 stores operating around Australia and New Zealand. (106 branded JB Hi-Fi)
JBH delivered another record result in 2009 with sales up 27.3%on the prior year, EBIT growth of 39% and NPAT growth of 45% at year-end. This was achieved through a combination of strong comparative store sales growth and a continued expansion of its product offering.
JB Hi-Fi presents itself as a company that is profitable, highly efficient in relation to operational performance, liquid relative to its business model and capable of company and shareholder growth.
| | |2009 |2008 |2007 | |Return on equity |41.19% |39.71% |35.71% | |Return on assets |15.12% |13.36% |10.17% | |Gross profit margin |21.63% |21.86% |22.11% | |Profit margin | |5.46% |4.63% |4.05% |
JBH have a strong net income...