Shares of Australian retailer JB Hi-Fi Limited (AU:JBH) soared to a record high after the company announced a special dividend of AU$0.80 per share despite reporting a drop in its FY24 profits. The company’s net profit after tax for the year fell to AU$438.8 million from AU$524.6 million in FY23. Additionally, JB Hi-Fi announced the acquisition of E. & S. Trading Co.
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Following the results, JBH stock surged 8.3% today, leading to a year-to-date gain of 34%.
JB Hi-Fi is an Australian retailer of consumer electronics and home appliances. It operates through three segments: The Good Guys, JB Hi-Fi Australia, and JB Hi-Fi New Zealand.
JB Hi-Fi’s Rationale Behind E. & S. Trading Deal
JB Hi-Fi has agreed to acquire a 75% stake in Australia-based E. & S. Trading Co. for AU$47.8 million in cash, along with an option to gain full control in the future.
E. & S. Trading offers premium products in the kitchen, laundry, and bathroom segments and has over 60 years of experience. The acquisition provides JB Hi-Fi an opportunity to expand its customer base and product range with high-quality, complementary products.
Highlights from JB Hi-Fi’s FY24 Results
In FY24, JB Hi-Fi’s revenues declined by 0.4% year-over-year to AU$9.6 billion. Among its segments, JB Hi-Fi New Zealand saw a 12.3% year-over-year sales increase to NZ$327.9 million, driven by strong online sales.
In contrast, The Good Guys business reported a 4.8% decline in sales, while JB Hi-Fi Australia experienced a modest growth of 1%.
Along with its special dividend, JB Hi-Fi declared a final dividend of AU$1.03 per share for FY24. As a result, the total dividend for FY24 was AU$2.61 per share, which was 16.3% below the previous year’s payment. Nonetheless, the full-year dividend represented 65% of the company’s NPAT (net profit after tax).
Is JB Hi-Fi a Good Stock to Buy?
According to TipRanks consensus, JBH stock has received a Hold rating based on three Buys, three Sells, and one Hold recommendation from analysts. The JB Hi-Fi share price target is AU$63.21, which is 13.4% below the current trading level.
