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Should you buy JB Hi-Fi shares today?

Kenneth Hall
JB Hi-Fi

JB Hi-Fi Ltd (ASX: JBH) shares have had a solid year in 2019 and climbed 80% higher. Those gains put the Aussie retailer amongst the top-performing ASX 200 shares for the year.

But with the group’s shares trading near a 52-week high right now, is there time to buy in before 2020?

What are the challenges for Aussie retail?

Low interest rates were designed in part to help kickstart the struggling economy this year. The Reserve Bank of Australia slashed rates from 1.50% p.a. to just 0.75% p.a. in the hope of providing an economic boost.

While residential real estate has rebounded on the back of cheap credit, it hasn’t been quite the same for the Aussie retail sector.

JB Hi-Fi shares have been climbing higher alongside Harvey Norman Holdings Ltd (ASX: HVN) on the ASX, but it’s not all good news.

Many in the market are bracing for a weak December for retail sales. That could spell trouble for some of the large Aussie retailers, particularly given the already difficult environment.

We’ve seen a number of Aussie retailers enter voluntary administration or liquidation in recent years, but somehow JB Hi-Fi keeps performing.

The Aussie retailer has continued to see strong earnings including a recent Q1 2020 update that has fuelled JB Hi-Fi shares higher in November and December.

JB Hi-Fi Australia reported Q1 2020 total sales growth of 4.7% and comparable sales growth of 3.7%. JB Hi-Fi New Zealand’s figures were also strong, with total sales and comparable sales both up 3.8%.

The retail group also reaffirmed its FY20 guidance at $7.25 billion in sales.

Should you buy JB Hi-Fi shares?

JB Hi-Fi shares closed out the Christmas week at $39.47 per share, just shy of its $39.82 52-week high set on Tuesday.

Despite its lofty valuation, the group’s shares are trading at 18.3 times earnings and have a handy 3.60% dividend yield on offer as well.

If you think Aussie retail can rebound in 2020, JB Hi-Fi could be a good value option to buy at the moment.

The post Should you buy JB Hi-Fi shares today? appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019