348 Accounting: Business Reporting for Decision Making
Analysis of market performance: JB Hi-Fi Ltd
Because the market performance ratios are often available in the annual report of listed companies, as
well as in the financial press, we will not calculate the ratios for JB Hi-Fi Ltd. Instead, the market perfor-
mance ratios for the company over the past five years are summarised in table 8.1.
TABLE 8.1 Market performance ratios for JB Hi-Fi Ltd2015 2014 2013 2012 2011 2010
NTAB per share $ 2.62 $ 2.12 $ 1.61 $ 1.07 $ 0.75 $ 1.93
EPS $ 1.36 $ 1.27 $ 1.17 $ 1.06 $ 1.01 $ 1.08
Gross cash flow per share $ 1.81 $ 1.67 $ 1.59 $ 1.45 $ 1.52 $ 1.33
DPS $ 0.90 $ 0.84 $ 0.72 $ 0.65 $ 0.77 $ 0.66
Dividend payout ratio 65.42% 66.20% 61.53% 61.40% 62.16% 60.87%
PER 14.28 14.42 14.37 8.37 16.88 17.59
Year-end share price $19.48 $18.30 $16.81 $ 8.86 $17.07 $19.07Source: Morningstar 2015, FinAnalysis of JB Hi-Fi Ltd, http://www.morningstar.com.au.
The trends in the market performance ratios for JB Hi-Fi Ltd are generally positive. The EPS has gone
from $1.08 in 2010 to $1.36 in 2015. It is worth noting that JB Hi-Fi Ltd repurchased shares in 2011. A
reduction in the number of shares on issue will improve any ratio that involves the number of shares in
the denominator, all else being equal. The EPS disclosed by JB Hi-Fi Ltd at the bottom of its statement
of profit or loss is based on the weighted average number of shares on issue during the year as opposed
to the number of shares on issue at the end of the year (as in table 8.1). The gross cash flow per share
is higher than the EPS, but the gross cash flow ratio reported may not be restricted to operating cash
flows only. Cash flow ratios are also generally higher than profit-based ratios because cash flows do not
include depreciation and amortisation as these are non-cash flow expenses.
The company’s dividend payout ratio hovers around 60 per cent. JB Hi-Fi Ltd is distributing more than
half of its current reporting period’s profit as dividends to its shareholders. The consistency in the payout
ratio reflects the company’s preference to not significantly vary dividends each year even if profits vary.
The price earnings ratio suggests that investors in 2015 were prepared to pay 14.28 years of earnings to
acquire a share in JB Hi-Fi Ltd. With the exception of 2012, this is lower than the PER in any other year
and reflects factors such as lower market sentiment. JB Hi-Fi Ltd’s share price increased from $19.07 in
2010 to $19.48 in 2015; a recovery on the $8.86 the shares were trading for at the end of June 2012. The
total return to shareholders from any share investment is the capital growth plus dividends.
The reality check ‘ANZ shares surge after $3.5b profit beats expectations’ discusses the share price
impact of a profit announcement by ANZ.
REALITY CHECKANZ shares surge after $3.5b profit beats expectations
ANZ has posted a $3.5 billion first-half profit, a little ahead of many analyst forecasts, a day after
Westpac surprised the market with a flat result and sent bank shares tumbling. The bank’s net profit
grew 3 per cent from the same period a year ago, in contrast to Westpac’s lack of growth.
On its preferred cash figure, ANZ made just under $3.7 billion, up 5 per cent on last year. Morgan
Stanley bank analysts had expected ANZ to post a $3.63 billion cash profit.
The better than expected result saw ANZ shares up 3.7 per cent to $34.47, with other banks also
basking in its surprisingly good performance with gains above 1 per cent. However, Westpac was lag-
ging after yesterday’s disappointing half-year result, up 0.5 per cent to $35.78.
Source: Janda, M 2015, ‘ANZ shares surge after $3.5b profit beats expectations’, ABC News, 5 May.