There’s a chance that the Kogan.com Ltd (ASX: KGN) share price could actually be a resurgent buy. It has already risen by 25% in August 2021.
The FY21 result was just released., which is where Rask Media’s latest coverage is.
Is there more Kogan share price growth to come?
Well, no-one knows what a share price is going to do next. But share prices do typically follow earnings, or at least the direction the market thinks earnings are going.
Australia is currently seeing its two biggest cities in lockdowns which don’t seem like they’re ending any time soon. It’s a lockdown environment that saw e-commerce players do particularly well during 2020. It’s certainly possible that there could be more online shopping demand in FY22.
Other businesses are actually reporting that online sales are increasing in the first few weeks of FY22. Kogan isn’t exactly the same business as Adairs Ltd (ASX: ADH) or Baby Bunting Group Ltd (ASX: BBN), but it’s good to see that up to 12 August 2021 Baby Bunting’s online sales were up 32.6% year on year.
What is happening for the company right now?
Kogan recently revealed some of its financial numbers for FY21. Gross sales increased by 52.5% to $1.18 billion. That included a $80.3 million contribution from Mighty Ape and $1.1 billion from Kogan.com (up 42.1%).
It said gross profit growth grew 61% to $203.7 million. This included a $19.9 million contribution from Mighty Ape and $183.8 million from Kogan.com (up 45.3%). Kogan revealed that its total adjusted EBITDA (EBITDA explained) rose 23.1% to $61.1 million. This included a contribution of $6.9 million from Mighty Ape and Kogan.com adjusted EBITDA was $54.2 million (up 9.2%).
Those growth numbers aren’t as strong as what investors were seeing in the 2020 calendar year (including the HY21 result). But it shows that Kogan still had a solid year.
Could the Kogan share price be a good opportunity?
I can understand why some investors aren’t a fan of the management. The Kogan brand might not be the highest quality. Its inventory issues were not a good look on the business or helpful for its profit.
But those issues don’t stop it from growing in the future. Many customers are on the look out for products at low prices, which is exactly what Kogan provides. I also like that Kogan is providinga number of extra services that it can offer to its Kogan customers, making it possible to earn more profit from customers.
Acquisitions aren’t an important part of the thesis, but Kogan has shown with its acquisition of Mighty Ape that it’s willing to diversify. Building market share in the ANZ region is a good strategy.
Using CommSec data, the latest Kogan share price is valued at 32 times the estimated earnings for the 2023 financial year. That’s certainly not cheap, but if Kogan can get back to decent growth then I think it’s very reasonable. The e-commerce growth trend is only going to keep going in my opinion.
