How Does JB Hi-Fi Limited's (ASX:JBH) Earnings Growth Stack Up Against Industry Performance?
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Assessing JB Hi-Fi Limited's (ASX:JBH) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess JBH's recent performance announced on 31 December 2018 and evaluate these figures to its long-term trend and industry movements.
View our latest analysis for JB Hi-Fi
How Well Did JBH Perform?
JBH's trailing twelve-month earnings (from 31 December 2018) of AU$242m has jumped 13% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 15%, indicating the rate at which JBH is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, JB Hi-Fi has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 9.1% exceeds the AU Specialty Retail industry of 6.7%, indicating JB Hi-Fi has used its assets more efficiently. However, its return on capital (ROC), which also accounts for JB Hi-Fi’s debt level, has declined over the past 3 years from 48% to 24%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 15% to 31% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as JB Hi-Fi gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research JB Hi-Fi to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for JBH’s future growth? Take a look at our free research report of analyst consensus for JBH’s outlook.
Financial Health: Are JBH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
