Stock Valuation Models for JB Hi Fi and Harvey Normal Holdings Limited

This article discusses the stock valuation models for JB Hi Fi and Harvey Normal Holdings Limited using discounted cash flow and price earning models. It includes future cash flows, terminal value calculation, equity value, number of shares, and value per stock.

Stock Valuation Models
JB Hi Fi Limited
Discounted Cash Flow
Model
Two Staged Model
First Stage
Amounts in AU$
million
Discounted Cash Flows
Model 2018 2019 2020 2021 2022
Future Cash
Flows( Leveraged)
$
211.25
$
231.23
$
235.45 $ 236.05 $ 269.32
Discounting Rate @ 8.55% 0.921 0.849 0.782 0.720 0.664
Present value of Cash Flows
$
194.61
$
196.24
$
184.08 $ 170.01 $ 178.70
Total Present Value
$
923.64
r= 8.55% Cost of Equity, Yahoo Finance, 2018
g= 2.8% 10 year Government Bond Rate
Second Stage
Terminal Value
Calculation (FCF2022 x ( 1+ g))/ (r-g)
(269.32x (1+ 2.8%))/ (8.55%-2.8%)
Terminal Value
$
4,814.97
Present Value of Terminal
Value (4814.91/(1+8.55%)^5)
$
3,194.81
Equity Value
Total Present Value of FCF + Discounted
Terminal Value
Equity Value of Company $

4,118.45
Number of Shares (Annual Report, 2018) (in million) 115.8
Value per
Stock
Equity Value/ Outstanding Number of
Shares $ 35.57
Price Earning Model:
EPS (Annual Report, 2018) $ 2.01
PE
Ratio (Yahoo Finance, 2018) 12.42
Share
Value PE Ratio x EPS $ 24.96
Harvey Normal Holdings Limited
Discounted Cash Flow Model:
Two Staged Model
First Stage
Amounts in AU$
million
Discounted Cash Flows
Model 2018 2019 2020 2021 2022
Future Cash
Flows( Leveraged)
$
419.00
$
411.00
$
443.09 $ 325.07 $ 350.45
Discounting Rate @ 8.55% 0.921 0.849 0.782 0.720 0.664
Present value of Cash Flows
$
386.00
$
348.80
$
346.42 $ 234.13 $ 232.53
Total Present Value
$
1,547.88
r= 8.55% Cost of Equity, Yahoo Finance, 2018
g= 2.8% 10 year Government Bond Rate
Second Stage
Terminal Value
Calculation (FCF2022 x ( 1+ g))/ (r-g)

(350.45x (1+ 2.8%))/ (8.55%-2.8%)
Terminal Value
$
6,265.44
Present Value of Terminal
Value (6265.44/(1+8.55%)^5)
$
4,157.21
Equity Value
Total Present Value of FCF + Discounted
Terminal Value
Equity Value of Company
$
5,705.09
Number of Shares (Annual Report, 2018) (million) 1114.73
Value per
Stock
Equity Value/ Outstanding Number of
Shares $ 5.12
Price Earning Model
EPS (Annual Report, 2018) $ 0.34
PE
Ratio
(Yahoo Finance,
2018) 10.10
Share
Value
PE Ratio x
EPS $ 3.40

References:
Harwey Norman. (2018). Annual Report: 2018. Retrieved from:
http://clients.weblink.com.au/news/pdf2/02027865.pdf
JB Hi Fi. (2018). Annual Report: 2018. Retrieved from: http://member.afraccess.com/media?
id=CMN://3A498121&filename=20180813/JBH_02008547.pdf
Simplywall. St. (2018). An Intrinsic Calculation For Harvey Norman Holdings Limited
(ASX:HVN) Shows It’s 27.53% Undervalued. Retrieved from:
https://simplywall.st/stocks/au/retail/asx-hvn/harvey-norman-holdings-shares/news/
an-intrinsic-calculation-for-harvey-norman-holdings-limited-asxhvn-shows-its-27-53-
undervalued/https://simplywall.st/stocks/au/retail/asx-jbh/jb-hi-fi-shares/news/an-
intrinsic-calculation-for-jb-hi-fi-limited-asxjbh-shows-its-35-83-undervalued/
Simplywall. St. (2018). An Intrinsic Calculation For JB Hi-Fi Limited (ASX:JBH) Shows It’s
35.83% Undervalued. Retrieved from:

https://simplywall.st/stocks/au/retail/asx-jbh/jb-hi-fi-shares/news/an-intrinsic-
calculation-for-jb-hi-fi-limited-asxjbh-shows-its-35-83-undervalued/
Yahoo Finance. (2018) . Estimating The Intrinsic Value Of Harvey Norman Holdings
Limited (ASX:HVN). Retrieved from: https://finance.yahoo.com/news/estimating-
intrinsic-value-harvey-norman-230908404.html
Yahoo Finance. (2018) . Harvey Norman Holdings Limited (HVN.AX). Retrieved from:
https://finance.yahoo.com/quote/hvn.ax?ltr=1
Yahoo Finance. (2018) . JB Hi-Fi Limited (JBH.AX). Retrieved from:
https://finance.yahoo.com/quote/JBH.AX?ltr=1
Yahoo Finance. (2018) a. Harvey Norman Holdings Limited (HVN.AX). Retrieved from:
https://finance.yahoo.com/quote/hvn.ax?ltr=1
Yahoo Finance. (2018). How JB Hi-Fi Limited (ASX:JBH) Delivered A Better ROE Than Its
Industry . Retrieved from: https://finance.yahoo.com/news/jb-hi-fi-limited-asx-
215109832.html