The All Ordinaries Index (ASX: XAO) is unlikely to rocket 83% in a year, but this promising ASX All Ords stock just might.
That's according to the team over at Macquarie Group Ltd (ASX: MQG).
The potentially resurgent company in question is Aussie retail jewellery chain Michael Hill International Ltd (ASX: MHJ).
Michael Hill shares closed on Friday trading for 41 cents apiece.
That sees this ASX All Ords stock down 26% since this time last year. And stockholders won't have gotten any relief from dividends this past year. Michael Hill's last interim dividend payout was delivered on 22 March 2024.
But according to Macquarie, the year ahead should be much more profitable for stockholders, not just in terms of share price gains but also with a potential return of the Michael Hill dividend.
Here's what the broker had to say.
Time to buy this beaten-down ASX All Ords stock?
Michael Hill reported its FY 2025 trading update results on 31 July.
Commenting on the ASX All Ords stock's full-year performance, Macquarie said, "In a difficult trading environment, the delivery of flat group revenue in FY25 was a solid result, with only NZ in negative territory."
The broker added:
Initiatives aimed at protecting near term GP [gross profit] margins, and providing a platform for reflation towards a target level of ~64% gained traction over the year, and in 2H25 MHJ addressed some of the operating cost pressure that underpinned lower comparable EBIT [earnings before interest and tax] in 1H25 vs pcp, including the closure on EBIT loss making stores, supply chain improvements and enhanced product ranging, pricing and promotional programs.
Looking ahead, Macquarie expects Michael Hill could double its earnings inside the next two years. And that should become evident in the year ahead.
Macquarie said:
We see a clear path for MHJ to deliver near-term comparable EBIT of ~ $30m (double the FY24/FY25 level), probably achievable in FY27, with a step change toward that target expected in FY26.
As for the return of that welcome passive income, the ASX All Ords stock is unlikely to pay a final dividend this year. But Macquarie expects the Michael Hill dividend to make a comeback in FY 2027, or sooner.
"We continue to forecast no dividend for FY25," the broker said. "While our forecast have dividends resuming on FY27, we would expect the board to review the possible resumption of dividends in FY26, depending on trading outcomes."
Connecting the dots, Macquarie concluded:
While MHJ faces near-term operating headwinds (albeit reducing), the magnitude of the prevailing discount to assessed fair value, the expected recovery in GP margins and identified multi-channel growth initiatives combine to support our outperform rating.
Macquarie has a 12-month target price of 75 cents per share for the ASX All Ords stock.
That's 83% above Friday's closing price of 41 cents per share.
