The Kogan.com (ASX: KGN) share price has risen around 3% after giving a June 2020 business update.
What is Kogan.com?
is an online business that was set up by Ruslan Kogan in 2006 in his parent’s garage. Kogan.Com offers a variety of products and services including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance and Kogan Travel. The company plans to launch Kogan Super in the near future. Kogan.Com aims to offer consumers price leadership through digital efficiencies.
June 2020 business update
Kogan.com reported more strong growth during the fourth quarter of FY20 compared to the fourth quarter of FY19.
Gross sales grew by over 95%, gross profit increased by more than 115% and adjusted EBITDA (click here to learn what EBITDA means) increased by around 150%. Adjusted EBITDA excludes foreign currency, share compensation and ‘one-off non-recurring items’.
Kogan.com said in June 2020 gross sales were approximately $94 million, gross profit was up more than $17 million and adjusted EBITDA was over $7.9 million. FY20 adjusted EBITDA grew by more than 57%.
Active customers grew to 2.18 million as at 30 June 2020. It added another 109,000 active customers in June 2020.
The eCommerce business said that it finished FY20 with $147 million and no debt, which doesn’t include the $20 million share purchase plan as part of the capital raising.
Kogan.com finished with total inventory of $113.1 million, with $80.6 million in the warehouse and $32.5 million in transit.
Ruslan Kogan, Founder and CEO of Kogan.com, 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. Our business is booming as more customers than ever choose Kogan.com.”
Kogan.com is in a strong position with its balance sheet and growing customer base. It’s well suited to thrive in this COVID-19 period we’re living through.
But the question is – does it represent good value today? Since 16 March 2020 the Kogan.com share price has risen by 373%. Its adjusted EBITDA hasn’t grown by that much, even if you just take the June 2020 quarter growth rate. Will it be able to keep growing at the pace over FY21? Time will tell. A lot of the country is now COVID-19 free and may go back to normal physical shopping.
Using CommSec’s FY21 estimated earnings, it’s trading with a forward price/earnings ratio of 53. It’s ‘cheaper’ than some other growth names, but I think one of these two growth shares could be better buys today.