Why the Kogan.com Ltd share price stormed higher today

The Kogan.com Ltd (ASX:KGN) share price has been one of the biggest movers on the market today. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Kogan.com Ltd (ASX: KGN) share price is on course to finish the week with a strong gain following its annual general meeting.

At the time of writing the e-commerce company's shares are up almost 9% to $4.14.

Why are they higher?

Within its annual general meeting presentation, CEO Ruslan Kogan provided the market with a trading update.

Kogan recently advised of a strong start to FY 2018 and that sales and EBITDA growth were up 35.9% and 37.7%, respectively, over the prior corresponding period.

Since then trading has improved further and, as of the end of October, revenue growth had accelerated to 36.2%. Furthermore, the company has seen its gross margin widen to 18.4%, leading to an acceleration in EBITDA growth.

Although management has decided against providing any full-year guidance, it expects the company to continue its trajectory of strong revenue growth as its continues to invest in its brand, inventory, and marketing. It also expects its EBITDA margin to continue to widen as it diversifies its business.

Should you invest?

I have been thoroughly impressed with Kogan's performance over the last 18 months. However, it will arguably be the next 18 months that makes of breaks the company.

While Kogan believes that Amazon's launch will actually be a positive for it, I'm undecided on this. I struggle to find an example of a Kogan-like company that has thrived in the US or the UK alongside Amazon.

If its shares were trading on a much lower multiple then I might be happy to take on the risk, but at 114x trailing earnings the valuation is a little bit rich for my tastes.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »