From Roger Montgomery: "Final thoughts: JB Hi-Fi showcased a...

From Roger Montgomery:

"Final thoughts:
JB Hi-Fi showcased a robust performance in FY23. With group sales up, despite comping COVID re-opening numbers from last year, the result shines a light on the unquestionable quality of the group’s competitive position in the Australian marketplace.   
The slowing consumer picture might be expected to cap the performance of the shares, which are up 15 per cent since the end of June and have bounced at the time of writing on better-than-feared numbers. The degree of any continuation however will depend on the extent to which JBH shares benefit from a ‘flight to quality’ amid a seriously weak picture for many other retailers in July, August and possibly September.
Of course, the agility of the company in adapting to weakening consumer conditions will be a determining factor in its future growth trajectory. That growth will also determine its value.

Valuation:
Assuming a long-term return on equity (ROE) of 22 per cent (the ROE for the next few years is likely to be closer to 24 per cent), a conservative discount rate of eight per cent, and a continuation of the recent payout ratio of circa 66 per cent, I estimate the value of JB Hi-Fi to be in the vicinity of 12 per cent above the current share price, noting the competing dynamics for the share price of a flight to quality and a slowing and uncertain retail outlook."

https://rogermontgomery.com/jb-hi-fis-fy23-results-overview/