DCF Studio

    JBH.AX · ASX · Consumer Cyclical

    JB Hi-Fi Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 37.12

    Market price

    AUD 65.22

    Implied upside

    -43.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReported capital expenditure averages just 0.77% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 2.41% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    AUD 37.12-43.1%
    Exit multiple
    AUD 66.20+1.5%
    Market price
    AUD 65.22

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m161m321mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 11.6bnAUD 12.1bnAUD 12.7bnAUD 13.3bnAUD 14.0bn+4.7%
    EBITAUD 527.0mAUD 552.0mAUD 578.2mAUD 605.7mAUD 634.4m+4.7%
    NOPATAUD 368.9mAUD 386.4mAUD 404.7mAUD 424.0mAUD 444.1m+4.7%
    Add depreciation & amortisationAUD 279.8mAUD 293.1mAUD 307.0mAUD 321.6mAUD 336.8m+4.7%
    Less capital expenditureAUD -279.8mAUD -293.1mAUD -307.0mAUD -321.6mAUD -336.8m+4.7%
    Less increase in working capitalAUD -101.9mAUD -106.8mAUD -111.9mAUD -117.2mAUD -122.7m+4.7%
    Free cashflow to firmAUD 266.9mAUD 279.6mAUD 292.9mAUD 306.8mAUD 321.4m+4.7%
    Discount factor0.95330.86630.78720.71540.6501-
    Present valueAUD 254.5mAUD 242.2mAUD 230.6mAUD 219.5mAUD 208.9m-4.8%
    Present Value Of The ForecastAUD 1.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta0.886Reported 0.830, pulled toward 1.0 (Blume)
    Cost of equity10.66%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 7.1bn91.0% of capital
    Total debtAUD 705.0m9.0% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC10.04%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareAUD 37.12

    75% of EV

    Forecast FCFF, final year
    AUD 321.4m
    Capex at depreciation, working capital in reinvestment
    AUD 444.1m
    Less reinvestment at g/ROIC (13.0% of NOPAT)
    AUD -57.8m
    Capitalised
    AUD 386.3m
    ROIC (reported)
    19.2%
    Terminal value, undiscounted
    AUD 5.3bn
    Terminal value, discounted
    AUD 3.4bn
    Enterprise value
    AUD 4.6bn
    Less net debt
    AUD 498.5m
    Equity value
    AUD 4.1bn

    Exit at 10.5x EBITDA

    Value per shareAUD 66.20

    85% of EV

    Terminal value, undiscounted
    AUD 10.2bn
    Terminal value, discounted
    AUD 6.6bn
    Enterprise value
    AUD 7.8bn
    Less net debt
    AUD 498.5m
    Equity value
    AUD 7.3bn

    Spread between methods: 56%.

    Sensitivity

    Value per share (AUD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.04%47.3749.7152.4755.7659.75
    9.04%40.2641.8243.6145.6948.12
    10.04%34.8335.9137.1238.4940.05
    11.04%30.5531.3132.1533.0834.13
    12.04%27.1027.6428.2328.8929.61

    Outlined: this model. Green text: above today's price of 65.22. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year4.7%25.0%+20.2pp
    EBIT margin4.5%7.3%+2.8pp
    Discount rate10.0%7.0%-3.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.