Michael Hill at $0.45: First-Half Profit Jumped 32%, So Why Is the Stock So Cheap?

Michael Hill International just reported a 32% jump in first-half profit, with its Canadian business posting record sales. And yet the MHJ.NZ stock trades at around 45 cents, on a market value that looks modest against the earnings the company is now producing. That mismatch between a strong result and a low price is the heart of the Michael Hill question.

Michael Hill is a specialist jewellery retailer with roots in New Zealand and a network of about 280 stores across Australia, New Zealand, and Canada. It sells rings, watches, and fine jewellery, with a particular strength in bridal and diamond categories, and in recent years has added the Bevilles brand in Australia.

Recent Performance

As of early 2026, MHJ traded around $0.45, giving the company a market capitalisation of roughly $175 million. The stock has been a quiet performer, drifting in a narrow band while the wider market has questioned how a discretionary retailer would fare with cautious consumers.

The latest result challenges that caution. The numbers improved noticeably, but the share price has not yet followed.

Key Metrics

The figures that frame the case:

• •Share price: around $0.45 NZD
• •Market capitalisation: roughly $175 million
• •H1 FY2026 revenue: $371.0 million, up 3.0%
• •H1 FY2026 net profit: $22.3 million, up 32.0%

A first-half net profit of $22.3 million against a $175 million market value looks strikingly cheap on the surface. One important caveat: a jeweller's first half includes the Christmas trading peak, which is comfortably its strongest period, so you cannot simply double the half-year profit to estimate a full year. Even allowing for that, the valuation looks undemanding for a business growing earnings at this pace. Dividends have been modest, so this is a stock to weigh on earnings and value rather than income. For how we adjust for seasonality when judging a retailer, see our [methodology](/methodology).

The Big Picture

The standout in the result was operating leverage. Group revenue rose just 3.0% to $371.0 million, but comparable EBIT (earnings before interest and tax) rose 28.6% to $31.0 million, and statutory net profit climbed 32%. When profit grows roughly ten times faster than sales, it tells you the company is running more efficiently and converting each extra dollar of revenue into far more profit.

Geographically, the story was led by Canada, where same-store sales grew 6.1%, described by management as another record performance. Australia lifted same-store sales 4.8%, helped by the Bevilles stores, and New Zealand returned to positive growth with a more modest 1.8%. Group same-store sales rose 3.8%.

Gross margin held at 61.2%, broadly steady despite higher input costs, particularly for gold and silver. Management offset that pressure with disciplined promotional activity and a better product mix, leaning into bridal, diamond fashion, and coloured stones. Holding margin while precious-metal costs rise is a genuine achievement, and it is the main reason profit grew so strongly.

Michael Hill sits alongside other listed New Zealand retailers navigating a cautious consumer, such as [Briscoe Group](/stocks/briscoe-group) and [Hallenstein Glasson](/stocks/hallenstein-glasson), though its Canadian exposure gives it a growth engine those domestic-focused names lack.

What to Watch

Three things will shape the outlook.

First, consumer spending. Jewellery is discretionary. If household budgets tighten across Australia, New Zealand, or Canada, sales of higher-ticket items feel it first.

Second, gold and silver prices. Rising precious-metal costs squeeze margins. Watch whether Michael Hill can keep offsetting that pressure with pricing and mix, as it did this half.

Third, the Canada engine. Canada has been the growth story. Watch whether that momentum continues and whether the store network there keeps expanding profitably.

The Bottom Line

The bull case for Michael Hill is a 32% profit jump, strong operating leverage, a record performance in Canada, and a share price that looks cheap against current earnings. The bear case is a discretionary retailer exposed to cautious consumers across three countries, rising precious-metal costs, and the seasonal flattery of a first-half result. At around $0.45, the market is pricing in plenty of doubt, and the company's job now is to prove the improvement can last beyond the Christmas peak.

*This article is for informational purposes only and does not constitute financial advice. Always do your own research or consult a licensed financial adviser before making investment decisions. Figures are drawn from publicly available company disclosures and market data and may change after publication. See our [methodology](/methodology) for how we approach these articles.*