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Market Analysis Latest ASX News

Kogan Is Booming on Recent Results (ASX:KGN)

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By Carl Wittkopp, Tuesday, 21 July 2020

At time of writing, the Kogan.com Ltd [ASX:KGN] share price sits at $17.06, trading close to its all-time high of $18.35. While many businesses are struggling in the current climate, Kogan is standing out as a clear winner...

At time of writing, the Kogan.com Ltd [ASX:KGN] share price sits at $17.06, trading close to its all-time high of $18.35.

While many businesses are struggling in the current climate, Kogan is standing out as a clear winner.

Kogan Share Price Chart 1 - ASX KGN

Source: Optuma

Kogan July business update

For companies like Kogan, the global pandemic created a nearly perfect set of business conditions.

Stuck at home, the trend towards e-commerce is strong.

It’s like having a captive audience.

This explosion in online shopping saw Kogan reap massive rewards from these conditions.

It’s a similar story for companies like Afterpay Ltd [ASX:APT] and JB Hi-Fi Ltd [ASX:JBH].

Kogan gave a business update recently and the results are strong:

  • Gross Sales up by more than 95%
  • Gross Profit up by more than 115%
  • Adjusted EBITDA up by more than 149%
  • Active Customers up to 2,183,000 as of 30 June 2020, tacking on more than 109,000 Active Customers in June
  • June 2020 Gross Sales of more than $94 million, Gross Profit of more than $17 million, and Adjusted EBITDA was more than $7.9 million
  • FY20 Adjusted EBITDA up by more than 57%

From these numbers you can see a picture of a company that is growing rapidly and finding efficiencies along the way (gross profit up more than gross sales).

At the release of the results, founder and CEO of Kogan.com, Ruslan Kogan, said:

‘In early July we celebrated four years since listing the Company on the ASX, and we are now proud to have delivered four consecutive years of significant growth in sales and earnings.’

Where to from here for the KGN share price?

From the March market low, the KGN share price shot up over 428% to $18.25, at the time of writing.

There may be some indicators of the stock being overpriced, the current P/E ratio for the All Ordinaries [XAO] is 32.57. And Kogan’s P/E ratio now sits at 58.68, according to CommSec.

This may be hinting at a pullback or at least a levelling off for the KGN share price.

Looking at the charts, a few things stand out:

KGN Share Price Chart 2 - Kogan Shares

Source: Optuma

With the KGN share price now sitting close to the all-time high resistance level of $18.35, it may take a bit of a push to snap through this level.

Should it do so, then the level of $19.90 may provide future resistance.

The current move up is still taking place on relatively high volume, so the push up might not be done yet.

Should the share price find resistance and start to retrace, then levels of $17.10 and $15.70 may provide future support and catch the fall.

Regards,

Carl Wittkopp,
For Money Morning

PS: Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well placed to capitalise on post-lockdown megatrends. Click here to learn more.

 

 

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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