The Jumbo Interactive share price just hit an all-time high: is it a buy?

The Jumbo Interactive Ltd (ASX: JIN) share price has jumped 3.18% higher to hit an all-time high of $8.77 on Friday afternoon.

The company specialises in selling lottery tickets online. It is currently in an expansion phase, actively pursuing further opportunities in the USA, Latin America, Asia, and Europe.

Jumbo has set its eyes on the growing online lotteries market as consumers shift their purchasing preferences. In 2017, the company initiated a 3-year project for a new software platform that will expand existing digital offerings to improve user experience and offer additional features.

Jumbo released a trading update in December 2018, which highlighted the continued growth in online lotteries. Below is a summary of what Jumbo told the market about their FY19 guidance:

  • Full-year net profit should be up 75% to $20.5 million
  • EBITDA should be up 66% to $32.3 million
  • Revenues should be up 38% to $54.9 million
  • Total transaction value should be up 44% to $264.1 million
  • Forecast number of large jackpots up 16% to 37

Is it too late to buy Jumbo shares?

I don’t believe it is. The company currently trades on a P/E ratio of 38x FY18 earnings. If Jumbo can deliver on their FY19 guidance figures above, this would put the company at a P/E ratio of just 22x FY19 projected earnings.

Jumbo has a proven record of outperforming market expectations and is showing further initiative in increasing customer engagement, digital technology and expanding its operations overseas.

And I’m not alone in thinking that the Jumbo share price is in the buy zone.

A note out of Morgans reveals that its analysts have upgraded the company’s shares target price by 1.9% to $10.90. This price target implies a potential upside of 28% based on Jumbo’s last closing price.

Jumbo is set to release an interim report to the market on February 15.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Jumbo Interactive Limited. 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 Scott Phillips.

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