One of the best performers on the Australian share market on Tuesday was the Kogan.com Ltd (ASX: KGN) share price.
The ecommerce company's shares rocketed a sizeable 12% higher to finish the day at a record high of $22.99. This means that the Kogan share price is now up 566% from its March low of $3.45.
To put that into context, if you had invested $20,000 into Kogan's shares at its low, it would now be worth over $133,000.
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Why did the Kogan share price rocket higher today?
Investors appear to have been fighting to get hold of Kogan's shares following a delayed response to its impressive full year results release on Monday.
For the 12 months ended 30 June 2020, Kogan reported a 39.3% increase in gross sales to $768.9 million. A key catalyst for this growth was a 35.7% increase in its active customer base to 2,183,000.
Another positive was its 4.7 percentage point increase in its gross margin to 25.4%. This was underpinned by the growth in commission-based and seller-fee-based revenue across new verticals and Kogan Marketplace.
As a result of this margin expansion, Kogan's earnings grew at an even quicker rate. Despite a big investment in marketing, Kogan reported a 57.6% increase in adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) to $49.7 million.
This strong form allowed Kogan to declare a fully franked final dividend of 13.5 cents per share. This was up 64.6% on the prior corresponding period and brought its full year dividend to 21 cents per share. Which means that investors that bought shares at $3.45 in March will receive a 6% yield on cost.
Positive start to FY 2021.
Also getting investors excited was Kogan's strong start to FY 2021.
In July, Kogan achieved unaudited gross sales growth of over 110% and gross profit growth of over 160%. It also revealed that its monthly adjusted EBITDA was more than $10 million during the month.
Annualised, this equates to more than $120 million of adjusted EBITDA, which is over 140% greater than FY 2020's adjusted EBITDA of $49.7 million.
Is it too late to invest?
Kogan's shares are now trading at a significant premium to the market average. This means they carry higher than average risk, which may make them unsuitable for many investors.
However, if your risk profile allows it, I feel Kogan could be an excellent long term investment. Though, better entry points may present themselves in the coming months, so it could pay to be patient.
