I thought Jumbo Interactive delivered a solid 1H26 result and management foresee a very positive outlook. However, negative market sentiment continues to drive the share price lower hitting a 6 year low today at $8.52.

Consensus FY26 NPAT is c. 72 cps, and FY27 NPAT is expected to be c. 87 cps. That would put Jumbo on a FY26 PE ratio of 11.8 and a FY27 PE ratio below 10. That’s the lowest PE ratio on historical earnings over the last 5 years (current is 14). I’m baffled to understand why the market is so negative on the business.

For a business expected to have double digit earnings growth and a ROE over 30% the shares seem to be incredibly good value to me.

I expect that going forward Jumbo will pay a fully franked 4.3% dividend (6% gross yield) at the revised 50% payout ratio. I’m in favour of the business retaining more earnings to reinvest into growth and to reduce debt (currently 39% debt to equity).

I’m not the only one seeing value in Jumbo. Morgan’s liked the 1H26 result and have “retained their buy rating and $14.90 price target on the shares. Morgans was pleased with Jumbo's performance in the first half, noting that it delivered a solid result. In addition, it was pleased to see that managed services continues to build momentum and that underlying SaaS trends remain healthy. Another positive is that Morgans believes the company can de-lever its balance sheet in FY 2027, leaving it well-placed for the remainder of the decade”.

At the current share price I think Jumbo could reward investors with a 16% return over the next few years. I’m a happy buyer at these prices.

Held IRL and SM. Accumulating on weakness.