JB Hi-Fi HY26 results: A wild ride begins?

JB Hi-Fi HY26 results: A wild ride begins?

It’s been a chaotic morning for JB Hi-Fi (JBH) investors. If you’ve been watching the screens, you might have developed a mild case of whiplash. JB Hi-Fi shares opened over 5 per cent higher at around $80, fell to $72 (down 4 per cent), and have since clawed back above $80, reflecting a classic case of a solid half-year result clashing with a cautious outlook for the rest of 2026.

A solid 1H26 result

On the surface, JB Hi-Fi remains a poster child of execution. Sales and Net Profit After Tax (NPAT) were both up over 7 per cent year-on-year (YoY), largely meeting or exceeding consensus expectations.

The good news

The Good Guys (TGG): A standout performer. Earnings Before Interest and Taxes (EBIT) was 7 per cent above consensus, reflecting a very strong prior period and impressive resilience.

Cost Management: JB Australia maintained its Cost of Doing Business (CODB) at 11.8 per cent, revealing its lean operating model remains a primary competitive advantage.

New Zealand: While still a small piece of the pie, the NZ business is seeing massive growth (Sales +32.6 per cent) as it scales up.

Returning cash to shareholders

One of the most significant takeaways from this update is the change in capital management. Management is increasing the dividend payout ratio from 65 per cent to 70-80 per cent.

While a higher dividend is always an Australian crowd-pleaser, it also signals a shift in strategy: JB Hi-Fi is effectively acknowledging returns on new growth capital might be inferior to prior returns. Essentially, the company is telling shareholders less of the profits can be redeployed at the prior high rates of return, so they’re better off being distributed. Another take is the company is maturing into a “cash cow”, prioritising the return of capital over expansion.

The January trading update

If 1H26 was the “good,” the January update is where the share price volatility likely originated. The company divulged a significant deceleration in Like-for-Like (LFL) sales growth compared to the same period last year:

• JB Australia: +2.4 per cent (vs. consensus 4.6 per cent)
• The Good Guys: +2.7 per cent (vs. consensus 3.4 per cent)
• E&S (Recent Acquisition): -7.9% per cent (A clear weak spot)

The softer January update is, according to JBH, due to two conditions: 1) customers pulling forward purchases to take advantage of the November/December Black Friday-Christmas promotions, and 2) some stock shortages. 

The E&S acquisition is currently underperforming, with a weak outlook that weighed on overall sentiment. Management pointed out lower returns should be expected in this longer-term ‘play’ and as considerable investment is made in new stores and the B2B business.  The slowdown suggests the “consumer cycle” might be finally cooling, testing JB Hi-Fi’s willingness to discount heavily to maintain momentum – a move that could pressure industry-leading growth rates.

Cost of Doing Business (CODB) grew slightly ahead of sales in the first half due to wage inflation and an ‘investment’ in additional shop floor hours to improve customer service.

Looking ahead

Despite the maturing market in Australia and New Zealand, and the perennial threat of Amazon’s expansion, management is leaning into three key drivers:

1. Online Efficiency: Leveraging consolidated distribution centres to squeeze out more operating leverage.
2. Business to Business (B2B) Commercial: Tapping into a Total Addressable Market (TAM) $500 million Small to Medium Enterprise (SME) market opportunity.
3. Upgrade Cycles: Banking on the rapid pace of electronics and device improvements to drive replacement sales.

As an aside, the company noted it expects price increases from PC suppliers of an average of 20 per cent.

The Valuation Debate: Analysts are divided. Based on a multiple of 16x FY26 Earnings Per Share (EPS), some place the fair value at approximately $73 per share – right where the stock dipped this morning. However, others (like UBS) maintain a more optimistic price target of $94, citing the strength of the core business.

JB Hi-Fi remains a brilliantly run business with a fortress-like balance sheet (zero debt and solid cash flow). However, the “easy” growth of the post-pandemic era is gone. Investors are now weighing the company’s legendary execution against a softening consumer environment, a maturing market and a price that may not have caught on.

Disclaimer: 

The Australian Eagle Trust holds a short position in JB Hi-Fi (ASX:JBH). This article was prepared 16 February 2026 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade JB Hi-Fi, you should seek financial advice.

MORE BY RogerINVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.

Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances. 

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.