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Why the ARB Corporation Limited (ASX: ARB) share price looks good

So far in 2022 the ARB Corporation Limited (ASX: ARB) share price has traced 46% lower. Meanwhile, the Temple & Webster Group Ltd (ASX: TPW) share price has drifted 69% lower.

ARB share price & data

Founded in 1975 by Tony Brown, ARB (ASX:ARB) is Australia’s largest manufacturer and distributor of 4×4 accessories with a global reputation for quality and innovation. The company has international offices in the United States, Europe and the Middle East, with an export network that extends through more than 100 countries around the world.

ARB Corp’s business is broadly diversified by geography, with operations in the USA, Middle East and Thailand (which does a lot of its manufacturing). However, by far the biggest segment is the Australasian business.

If you go into an ARB store or choose to buy your 4×4 bull bar or accessories from a car dealer, chances are, ARB’s products will be more expensive than the competition. This is because ARB has established its brand based on quality and reliability, giving its customers piece of mind – whether they’re driving in rugged terrain in outback Australia or on the way to school in suburban Sydney.

Right now, ARB Corporation Limited shares are trading at a price-earnings ratio (P/E) of 19x. To put that in context, the S&P/ASX 200 (INDEXASX: XJO) long run average is around 16x.

TPW share price

Temple & Webster was launched in Sydney in 2011 and is Australia’s leading online retailer of furniture and homewares.

The company operates through two brands namely Temple & Webster and Milan Direct. It runs a drop-shipping business model where orders are sent directly to customers from suppliers, negating the need for storing inventory.

Due to the nature of the capital-light business model, customers have access to an extremely wide range of products that can be shipped in a short amount of time. The company has over 180,000 products available through its platform

The TPW share price is trading at the equivalent P/E of 48x. However, valuation shouldn’t be the only focus since Temple & Webster Group Ltd (ASX:TPW) has been growing its revenue at 07% per year in recent times.

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