One of the hardest-hit S&P/ASX 300 Index (ASX: XKO) shares over the last several months has been Temple & Webster Group Ltd (ASX: TPW). It really strikes me as an oversold ASX stock after falling more than 50% this year.
It's understandable why there has been some volatility. AI worries and the Middle East conflict have impacted a wide range of ASX growth shares, including Temple & Webster.
The business sells hundreds of thousands of products across homewares, furniture and home improvement. It has already built an impressive market share across Australia.
Image source: Getty Images
Strong revenue growth rate
One of the key appealing aspects of the oversold ASX stock is how quickly revenue is growing. The speed of a company's growth is a key aspect that drives the underlying value because of how that flows to profit growth and scale benefits.
The FY26 half-year result included very impressive revenue growth numbers. In the first six months of the 2026 financial year, revenue increased by 20% to $376 million. On top of that, in the first several weeks of the second half of FY26, revenue grew by another 20%.
Part of the reason why the company is delivering impressive growth is the ongoing adoption of online shopping. E-commerce now makes up around 20% of the homewares and furniture sector in Australia, but the trends are positive for further growth based on other similar countries – online penetration has reached around 30% in the UK and even more in the US.
There are currently two other areas of the business I'm bullish about. Firstly, it recently started shipping items to New Zealand, which opens up a sizeable additional market to sell to.
Secondly, its home improvement segment is growing even faster than the main business. It's a significant growth avenue if it continues to execute well. HY26 home improvement revenue soared 47% to $30 million. If that growth trend continues, it will become an important contributor.
Capital-light model
One of the best parts of the Temple & Webster business model is that a significant majority of products sold through its website/portal are shipped directly by suppliers to customers.
This makes Temple & Webster capital-light because it doesn't need its own warehouses (and everything else) for those sales.
Under this set up, the company can produce a lot of cash flow and build a large cash balance.
In the FY26 half-year result, the business reported cash flow of $31.3 million and ended HY26 with a cash balance of $160.6 million. The large cash balance can help fund the ongoing share buyback (which boosts the value of each remaining Temple & Webster share)
Big growth goals for the ASX oversold stock
One of the final reasons why I think this business is an oversold ASX stock is because of the level of growth it's targeting.
In the next few years, the business is aiming to reach $1 billion of annual sales. It may not get there quite as fast as it was hoping, but it's still rapidly growing towards that target at a double-digit pace.
Additionally, the company is expecting to become much more profitable in the long-term.
In FY25, the business achieved an operating profit (EBITDA) margin of 3.1%. It's expecting an EBITDA margin of between 3% to 5% in FY26 and then to reach at least 15% in the long-term.
That suggests a significantly higher profit margin and it could be generating a lot more revenue by the time it reaches that revenue target.
According to the forecast on CMC Invest, the Temple & Webster share price is now valued at just 28x FY28's estimated earnings.
