Case Study JB Hi-Fi Limited Strategic Financial Analysis

Question: Discuss about theStrategic Financial Analysisfor JB Hi-Fi Limited. Answer: Business Description JB Hi-Fi Limited is one of the specialty discount retailer for branded home entertainment products. These particular Group products focus on consumer electronics, software as well as electronic goods such as music, games and movies (Jbhifi.com.au 2016). JB Hi-Fi Limited operates from stand-alone destination sites as well as shopping centre locations in and around online stores especially in Australia and New Zealand. Financial Summary Years NPAT EPS EPS (%) PER DPS Yield (%) Franking (%) 2016 152.8 154.4 11.1% 13.2 100.0 4.9% 100% 2017 196.8 172.7 11.8% 17.2 112.3 3.8% 100% 2018 212.2 186.3 7.9% 16.0 121.1 4.1% 100% Current Price Data Current Price $27.650 Open $28.690 High $28.830 Low $27.510 Last Close $29.080 Volume 714553 Price Movement $1.42 ( 4.92%) Financial Analyst Recommendations Recommendation Holding the shares of JB Hi-Fi Limited Updated Date 21st of October 2016 Surveyed Brokers 4 From the above figures, it has been noticed that averse investors should hold the shares of JB Hi-Fi Limited (Vogel 2014). If price movement and volume are directly related, then purchase will be favorable in comparison with other related factors. Therefore, price movement and current price shows negative figures as per the volume generated as on October 2016. The major reason why these investors should hold the shares of JB Hi-Fi Limited (Jbhifi.com.au 2016) Hold is the Financial Analysts recommendations that reveal to neither buy nor sell the security (Jbhifi.com.au 2016). JB Hi-Fi with hold recommendation will be expected in performing with market or at the same pace in comparison with other companies. In other words, rating is better in making sell but worse than buy revealing investors with existing long positions should not sell. It is investors without a position should make purchase in any case (Swayne, Duncan and Ginter 2012). Hold Strategies made by the financial analyst are investment recommendations as undertaken by financial institutions as well as other professional financial analysts. Holding is denoted under public traded equities. These stocks have either a buy or sell or holding recommendations (Hitt, Ireland and Hoskisson 2012). Most of the time single stock poses more conflicting recommendations for various institutions. In these cases, it is vital for the investors decide upon giving accurate solution during specific situations. On the other hand, in case investors do not own shares of related equity then they should wait for purchasing until future volatility for making it clear as far as possible (Jbhifi.com.au 2016). In the particular scenario, financial analysts decide in holding the shares of JB Hi-Fi Limited gaining given options. In case the investors own shares of the stock, they should hold or performs for short medium as well as long-term (Hill, Jones and Schilling 2014) Hold Strategy Most of the potential investors hold upon conducting a situation where an equity security purchases with common understanding of holding for long-term (Jbhifi.com.au 2016). It defines long-term plans depending upon specific investors by people who enter into maintaining holding strategy for owing stock for more than 5 years for the company JB Hi-Fi Limited (Healy and Palepu 2012). This particular holding strategy for the averse investors forces them in sticking with investments from market retractions as well as recessions in volatility situations of JB Hi-Fi Limited. Benefits of Holding In this particular scenario, investors are advisable in holding the stock for effective initiation for long position in equity. Investors holding stock for long period will be benefiting from quarterly dividends as well as potential price appreciation for specified time (Grant 2016). This share of JB Hi-Fi Limited gives hold recommendations as well as remains flat as it pays dividends for investors in gaining profit. Hold Position is not a bad recommendation as even stocks denotes hold as an appreciated price for specified time (Jbhifi.com.au 2016). Risks of Holding There is always risk prevailing for investors for holding a stock (Jbhifi.com.au 2016). These long positions for given equity. Investors holding stock remains susceptible for market volatility as well as decline in share prices. Investors predict macroeconomic or macroeconomic downturn for holding stock as leading financial institutions recommend it. In other words, if a price of the stock declines, investors lose lot of money (Berman and Evans 2013). Testing Skills with Trading Challenges Holding is a passive investment strategy whereby investors purchase stock as well as holds them for long period keeping in consideration various market fluctuations (Jbhifi.com.au 2016). If a particular investors, employs buy and hold strategy for active participation for selecting stock and concerned majorly with short-term price movement as well as technical indicators. Conventional investing wisdom means long time horizon for understanding the equities rendering higher return in comparison with other assets classes like bonds (Jbhifi.com.au 2016). In other words, there has been always an argument on whether involving in buy and hold strategy for actually involving in superior to active investing strategy. It has been noticed that both the sides poses valid arguments for gaining understanding for buy and hold strategy for tax benefits. This is for the reason long-term investments tending for remaining taxed at lower rates in comparison with short-term investments (Jbhifi.com.au 2016). Ownership Commitment In purchasing shares of common stock, taking ownership of JB Hi-Fi Limited will be beneficial in the most appropriate way. In other words, ownership has privileges for involving in gaining voting rights as well as stake in corporate profits for JB Hi-Fi Limited (Jbhifi.com.au 2016). Shareholders functions more like a direct decision-makers for taking voting rights for holding shares. Shareholders mostly vote in case of critical issues like mergers and acquisitions for electing Directors Board (Jbhifi.com.au 2016). Most of the activist investors gaining substantial holdings considers under influence for management for gaining help for representing under Board (Jbhifi.com.au 2016). It helps in recognizing change for taking time as committed by shareholders for adopting buy and hold strategies. It means treating ownership for short-term vehicle especially for profit for retention of shares in case of JB Hi-Fi Limited. Buying and holding investors retains shares with the help of bull market and bear markets (Jbhifi.com.au 2016). In this case, equity owner bears upon undertaking risk of failure or gaining supreme reward of substantial appreciation. Reference List Berman, B.R. and Evans, J.R., 2013. Retail management: a strategic approach. Pearson Higher Ed. Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley Sons. Healy, P.M. and Palepu, K.G., 2012. Business Analysis Valuation: Using Financial Statements. Cengage Learning. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases: competitiveness and globalization. Cengage Learning. Jbhifi.com.au. (2016).JB Hi-Fi | Australias Largest Home Entertainment Retailer. [online] Available at: https://www.jbhifi.com.au/ [Accessed 26 Oct. 2016]. Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care organizations. John Wiley Sons. Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis. Cambridge University Press.