JBH
30/6/26
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Summary - last 5 years
Over the last 5 years, ASX:JBH (JB Hi-Fi) has delivered resilient but moderating financial performance. Driven by a pandemic-era consumer spending boom, revenue and profit peaked in 2022, normalized in 2023–2024, and rebounded in 2025–2026. The company remains highly profitable, maintains a low-risk debt profile, and continues to reward shareholders with strong returns and dividends.
Below is a chart of dividend growth (in $AUD). Is it a dividend Aristocrat?
The current yield is 3%.
Key 5-Year Financial Metrics (FY2021 – FY2026)
- Revenue: Experienced steady growth. After peaking at an annualized rate of $10.55 billion in FY2025 and seeing further sales growth in 1H FY2026, the company continues to outpace pre-pandemic levels.
- Profit (NPAT): Hovered between $439 million and $545 million. FY2022 was the 5-year high ($545 million) before tapering off. However, the first half of FY2026 showed a solid bounce-back, with Net Income After Tax (NPAT) up 7.1% to $305.8 million.
- Return on Equity (ROE): Remained exceptionally robust. It peaked at a massive 42.1% in FY2022 and has since normalized to hover around 29.2% as consumer spending patterns level out.
- Debt: JBH maintains a conservative and healthy balance sheet. Total net debt sits around $340 million, with a debt-to-equity ratio of about 42.2%, meaning the company holds more equity than debt.
- Dividends: JBH has historically been a strong and reliable dividend payer. The payout ratio generally sits between 70–80% of net profit, offering investors a trailing yield above 5%.
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PE ratios
The historical price-to-earnings (P/E) ratio for JB Hi-Fi Limited (ASX:JBH) has fluctuated over the last 10 years between a low of 6.9x to 8.0x during the post-COVID retail cooling period and a high of 26.1x to 27.6x during the late 2025 retail stock rally. Its current 10-year median sits at approximately 13.5x to 15.8x. [1, 2, 3]
10-Year Annual P/E Ratio History
| Year [1, 2, 3, 4, 5] | P/E Ratio | Valuation Context |
|---|---|---|
| 2026 (Current TTM) | 17.5x | Moderating from peak as earnings stabilize. |
| 2025 | 26.1x | Share price peak alongside trailing cyclical retail demand. |
| 2024 | 15.2x | Return to historical median ranges. |
| 2023 | 9.1x | Market compressed valuations due to rising interest rates. |
| 2022 | 8.0x | Record profits post-COVID lowered the P/E multiple. |
| 2021 | 11.5x | Elevated earnings from the work-from-home electronics boom. |
| 2020 | 16.4x | Early pandemic demand spikes. |
| 2019 | 11.8x | Stable, mature-stage retail trading. |
| 2018 | 11.1x | Minor compression over broader retail sector fears. |
| 2017 | 15.1x | Integration of The Good Goods acquisition. |
| 2016 | 15.6x | Baseline historical trading multiple. |
Historical Averages & Context
- 10-Year Median: 13.47x to 15.84x (varies slightly by TTM calculation method). [1]
- Cyclical Volatility: Between 2021 and 2023, JBH traded at single-digit P/E ratios despite record net income. This happened because the market assumed peak pandemic earnings were unsustainable. [1]
- The 2025 Spike: The sudden rise to a P/E over 26x in 2025 was driven by a sharp increase in share price ahead of actual trailing earnings, which has since normalized back toward 17.5x. [1, 2]
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ROIC vs WACC
JB Hi-Fi Limited (ASX:JBH) has historically maintained a Return on Invested Capital (ROIC) well above its Weighted Average Cost of Capital (WACC), though recent macroeconomic shifts have narrowed this spread. [1, 2, 3, 4]
10-Year Trend Summary (2016–2026)
- ROIC Trajectory: JBH’s ROIC has typically fluctuated between 15% and 30%+ during peak retail periods (notably surging during the 2021–2022 consumer electronics boom with returns on equity/capital exceeding 40%) and settling around 11.54% to 15.94% in the most recent trailing periods. [1, 2, 3]
Key Current Metrics
- Return on Invested Capital (ROIC): 11.54% (TTM baseline) up to an annualized 15.94% depending on exact quarterly calculation inputs.
- Weighted Average Cost of Capital (WACC): Estimated between 7.86% (Alpha Spread model) and 11.88% (GuruFocus high-rate model).
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ARGO vs JBH buffett style sept 2026
Comparing ASX:ARG (Argo Investments) against ASX:JBH (JB Hi-Fi) from a Warren Buffett value-investing perspective highlights a foundational trade-off between a highly diversified asset-backing compounder and an operationally elite retail compounder with an economic moat. [1, 2]
The Financial Head-to-Head
| Metric | ASX:ARG (Argo) | ASX:JBH (JB Hi-Fi) | Winner (Buffett View) |
|---|---|---|---|
| Current P/E Ratio | 26.5x | 14.8x | JB Hi-Fi (More earnings power per dollar) |
| Forward Dividend Yield | ~4.2% (100% Franked) | ~5.1% (100% Franked) | JB Hi-Fi (Higher trailing and cash return) |
| 10-Year Dividend Growth | Slow / Cyclical Smooth | Strong (Compounded Double-Digit) | JB Hi-Fi (True dividend grower) |
| 10-Year Capital Growth | Moderate (Tracks ASX 200) | Exceptional (Massive outperformance) | JB Hi-Fi (Aggressive capital compounder) |
| Business Structure | Listed Investment Company (LIC) | Specialized Omni-channel Retailer | JB Hi-Fi (Operating business with a moat) |
Buffett-Style Breakdown
1. Price vs. Value (The P/E Ratio)
- Argo (26.5x P/E): Argo acts like a closed-end fund holding a basket of top ASX stocks (CBA, BHP, RIO). Its high standalone P/E is slightly misleading because it represents the pass-through valuation of its underlying asset portfolio. However, paying 26.5x earnings for a broad-market proxy does not offer a Buffett-style "margin of safety". [1, 2]
2. The Economic Moat & Capital Allocation
- Argo: Does not have an operational moat; its edge is low-cost, ultra-long-term professional management (operating since 1946). It is essentially a vehicle to "own the economy" rather than beat it. [1, 2]
- JB Hi-Fi: Features a wide consumer moat built on absolute scale, a low-cost operating model, and incredible supply chain power. Instead of wasting money on low-return expansions, its management returning capital via massive franked dividends and share buybacks perfectly mirrors Buffett’s favored capital allocation framework.
3. 10-Year Growth & Dividend Dynamics
- Argo: Growth is tethered to the broader Australian market. Over a 10-year horizon, it provides stable, sleep-at-night income, recently lifting its payout to a record 38.5 cents, but it lacks aggressive compounding power.
- JB Hi-Fi: Over the past decade, JBH transformed from a simple electronics retailer into an omni-channel powerhouse (turbocharged by the Good Guys acquisition). Its 10-year dividend growth profile is superior, converting a cyclical retail operation into a reliable dividend machine with a robust ~5.1% forward yield. [1, 2]
The Verdict
If Warren Buffett had to choose, he would overwhelmingly favor JB Hi-Fi (ASX:JBH).
While Argo is an exceptional, lower-risk vehicle for passive income and broad asset protection, JB Hi-Fi represents the quintessence of Buffett's philosophy: an elite operational business with high returns on capital, an enduring competitive advantage, trading at a highly reasonable valuation multiplier. [1, 2, 3]
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More buffett analysis
An analysis of JB Hi-Fi Limited (ASX: JBH) reveals exceptional operational efficiency, though it is currently normalizing from pandemic-era highs.
Evaluated against Warren Buffett's core tenets—consistently high Return on Equity (ROE), low leverage, and disciplined capital allocation—JBH grades out as a classic "Buffett-style" compounder, albeit constrained by its industry's limited reinvestment runway.
Historical ROE Trends (FY22–FY26)
JBH’s Return on Equity stands at 29.98% (TTM as of late 2026). While this is an elite tier of profitability for a brick-and-mortar retailer, it represents a standard normalization curve from the massive, stimulus-fueled consumer electronics boom seen earlier in the decade. [1]
- The Peak (FY22): ROE hit a five-year high of 42.1%, driven by compressed operating expenses and massive volume surges during work-from-home cycles. [1]
Buffett Capital Allocation Benchmarks
Warren Buffett evaluates management based on how efficiently they deploy cash to maximize shareholder value. Here is how JBH aligns with standard Buffett benchmarks:
| Buffett Benchmark | Benchmark Requirement | JB Hi-Fi Performance | Verdict |
|---|---|---|---|
| High Return on Capital | Sustained ROE > 15% without structural debt. | 5-year average ROE is 33.9%; ROIC remains exceptionally strong at 23.8%. | Pass (Exceptional) |
| Economic Moat / Pricing Power | High net margins or structural cost advantages. | Thin net margins (~4.4%) but exceptional Asset Turnover (2.85x) and scale. | Pass (Scale Moat) |
| Conservative Balance Sheet | Minimal long-term debt; Net Debt/EBITDA < 2x. | Highly conservative; routinely maintains Net Debt/EBITDA < 0.5x or a net cash position. | Pass (Exceptional) |
| Disciplined Shareholder Returns | Return cash if internal reinvestment rates are low. | Payout ratio target of 70% to 80% of earnings via fully franked dividends. | Pass (Shareholder Aligned) |
Strategic Breakdown & "The Buffett Dilemma"
1. The Quality of the ROE
Buffett explicitly warns against companies that generate high ROE purely by using dangerous amounts of debt leverage. JBH clears this hurdle easily. Its high ROE is structurally driven by an incredibly high Inventory Turnover (6.46x) and an aggressive low-cost, high-volume operating model. It uses minimal financial leverage to generate these returns. [1, 2]
2. Reinvestment vs. Distribution
The primary deviation from a textbook Berkshire Hathaway model is JBH's high dividend payout ratio. Buffett prefers companies that can retain 100% of their earnings and reinvest them at high rates of return.
However, Australia's consumer electronics market is mature and highly consolidated. JBH cannot efficiently open hundreds of new stores without cannibalizing itself. Recognizing this, management behaves exactly as Buffett dictates a mature business should: it distributes the cash. By paying out 70%–80% of its earnings, it avoids destroying value through reckless acquisitions, keeping its capital base lean and its ROE structurally high. [1]
3. Bolt-on M&A
When JBH does allocate capital towards growth, it opts for calculated, bolt-on acquisitions that map onto its existing supply chain competencies—such as its AU$47.8m acquisition of a 75% stake in premium appliance retailer e&s in 2026. This mimics Buffett's preference for adding small, high-margin, cash-generative operations to a core footprint. [1]
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