Macro Intelligence: how did JB Hi-Fi and Ansell perform in the latest ASX earnings season?

Written by Juliette Saly

Earnings season

In this week's edition of IG Macro Intelligence, we take a look at the February reporting season - with a deep dive on two stocks: Ansell Limited (ASX:ANN) and JB Hi-Fi (ASX:JBH).

Deep dive into JB Hi-Fi

Retailer JB Hi-Fi posted an 8% rise in first-half (1H) profit to $285.4 million, beating market estimates.

JB Hi-Fi key financial data

The result was a 21% improvement on H1 2024, with total sales in the period rising almost 10% to $5.67 billion. Online sales rose to 17.6% of total revenue, up from 16.2% in the same period last year.

JB Hi-Fi chief executive officer (CEO) Terry Smart highlighted strong sales in mobile phones, small appliances, and cameras, alongside staple categories like TVs and computers, as key growth drivers.

'In a challenging trading environment with increased competition, our priority remained on driving demand by delivering outstanding customer service and exceptional value,' said Smart.

JB Hi-Fi daily chart

Shares in JB Hi-Fi briefly hit a record following the result, before retreating as investors shifted their attention to a decline in gross margins. The electronic retailer saw its gross margin decline by 17 basis points (bp) to 21.8% in H1 amid increased competition.

A fully franked interim dividend of $1.70 was declared, up 7.6% year-over-year (YoY), but slightly below Citi forecasts of $1.76.

Consumer confidence

JB Hi-Fi was the first of the major Australian discretionary retailers to report H1 earnings, ahead of competitors Harvey Norman and Super Retail Group.

Analysts expect retailers to benefit from further sales in the second half (H2), as the flow-on effect from predicted interest rate cuts boosts consumer confidence. 'We consider this a strong update given concerns of a pull-forward of sales into the key promotional events of Black Friday and Boxing Day,' said Citi analysts.

Expansion and innovation initiatives

JB Hi-Fi is targeting five new stores in fiscal year (FY) 2025, with two already opened in H1. The retailer is also looking to leverage its 'JB Hi-Fi Perks' membership program, which currently has more than two million members, and is planning on adopting further artificial intelligence (AI) developments including AI-enabled device tech upgrades.

Stock performance and future outlook

The retailer may also be looking to lift prices to offset the weakness of the Australian dollar, with CEO Terry Smart saying the fluctuation in the foreignn exchange (forex) market is putting pressure on imports. E&P consumer research analyst Phillip Kimber called the result encouraging but noted the subsequent sell-off in JB Hi-Fi’s share price meant the market might have been expecting more.

Having surged more than 60% over the past 12 months, analysts are cautious about further upside for JB Hi-Fi in the current environment. The average recommendation on the stock is a 'hold' according to Refinitiv data, with the median price target $83.06, suggesting the stock could fall a further 15% from here.

Philip Pepe from Shaw and Partners told ausbiz the stock keeps defying analyst expectations and could be a $200 stock within the decade: 'If you look at the 10 to 20-year chart... it's a 'buy'." Similarly, the stock seems to be in an uptrend as confirmed by multiple indicators, according to ASX Tradewatch.

Technical analysis shows the 20 and 200-day moving averages (MA) both sloping upwards, suggesting the stock can continue rallying in both timeframes. Barrenjoey has raised its price target by almost 5% to $89 following JB Hi-Fi’s results.

JB Hi-Fi analyst recommendations chart

Deep dive into Ansell

Glovemaker Ansell, which reports in United States (US) dollars, posted a H1 net profit of US$55 million, up from US$19.4 million in 2024.

Revenue jumped 30% to just over US$1.02 billion, boosted in part by its acquisition of Kimberly-Clark assets in July.

Sales had been petering off as Covid-19 pandemic-driven demand fades; however, a rebound in H1 sales helped Ansell beat estimates and lift its dividend to US$0.22 in the half, up from US$0.16.

Ansell daily chart

Stock performance

Shares in Ansell rose to their highest level since August 2021 following its earnings update, as the glovemaker lifted its FY 2025 earnings per share (EPS) estimate to between US$1.18 to US$1.28, up from its previous guidance of US$1.10 to US$1.27.

That’s after rising close to 60% over the past 12 months. ASX TradeWatch data suggest the stock can continue rallying in both the short and long term, with both the 20 and 200-day MAs sloping upwards.

Brokers are positive on the stock, as it plans to offset potential US tariff hikes with price increases.

Strategic adjustments

CEO Neil Salmon has ruled out shifting jobs to the US, instead indicating tariffs would prompt the company to adjust its manufacturing locations for personal-protection equipment. Ansell has been diversifying its supply chain, recently shifting some chemical-protection manufacturing to Sri Lanka and upgrading a Mexico warehouse.

Citi raised its price target on the stock by 17% to $38 following the results, while Barrenjoey lifted its target by 15% to $36.20.

Meanwhile UBS has kept its 'neutral' rating on the stock with a $36 price target, noting while the result was better than consensus, some of that is due to a recovery in de-stocking from the previous corresponding period. UBS also cautions management guidance of slower growth in the H2 due to forex headwinds.

Lastly, Jefferies cut its recommendation on the stock to a Hold from a Buy.

Ansell analyst recommendations chart