Why should investors keep Temple & Webster (ASX:TPW) on the radar?

Summary

  • Investors have taken TPW’s full-year results positively, with the share price rising more than 15% during the intraday trading on the day of the announcement.
  • Temple & Webster has released its full-year results for the period ending 30 June 2021, indicating a strong sales increase.
  • Temple & Webster has a strong balance sheet to execute its long-term strategies and gain returns.

The share price of Australia's leading homewares and furniture retailer Temple & Webster (ASX:TPW) has given a  return of more than 47% in last one year, indicating a notable performance despite lockdowns and restrictions.

What worked as a catalyst for TPW growth?

Temple & Webster announced an 85% jump in its annual revenue for the full year ended 30 Jun 2021 over the previous fiscal year. Earnings also more than doubled in the last 12 months ending June 2021.

The online retailer reaped the benefit from a boom in house spending and a pandemic-driven shift to e-commerce.

Image Source: © Kgtoh | Megapixl.com

Also Read: Temple & Webster (ASX:TPW) Earnings Swell Up, Share Price On Watch

Sales for the fourth quarter increased to 26% compared to the previous fiscal year fourth quarter. EBITDA has gone up by 141% YoY to $20.5 million.

The company noted  a cash balance of AU$97.5 million in June this year, up from AU$38.1 million in June 2020.

What does management say?

Source: ASX update, 28 July 2021

The company has also maintained that its revenue for the first 24 days of the current fiscal was up by 39% from the previous year. 

The prospects of Temple & Webster for long-term growth depends upon the following factors –

Source: ASX update, 28 July 2021

Also Read: Temple & Webster Finetunes Strategy To Cash In On Online Shopping Trend

How are peers such as Kogan.com (ASX:KGN) and Adairs Ltd (ASX: ADH) performing?

However, going by the company's past performance, one can say that the performance of Adairs Ltd (ASX: ADH) has improved in recent times, especially since last year. The retailer of homewares and home furnishings has seen an impressive growth in its earnings which is a positive sign. However, if we compare Adairs’ current share price to what it was a year back, we see a share price increase of 65.8%.

                       

Why should investors keep Temple & Webster (ASX:TPW) on the radar?

 

Similarly, let's talk about another biggie, Australian online retailer Kogan.com (ASX:KGN). We can see that Kogan was one of the few ASX shares that benefitted from the Coronavirus pandemic last year, as the online retailer's share price increased by 279% from March 20 to July 10 last year. During this period, the share price of Kogan.com Ltd had gone up from AU$4.56 to a whopping AU$17.29. However, the company has given a negative return of 36% to its shareholders in the past one year.

Also Read: Why is Kogan share price on the decline?

Bottomline

At the onset of the Coronavirus pandemic last year, the share price of Temple & Webster dropped by over 30% in the initial market crash. However, this did not last for a long time. Thanks to online shopping, the company managed to survive and thrive during the lockdown period.

On Tuesday, its full-year results for the period ending 30 June 2021 led to a share price increase of 15% during the intraday trading. It was a drastic single-day jump compared to the past six months, making TPW one of the best performers on the All-Ordinaries Index on Tuesday.

The price rise primarily indicates investor’s confidence in the stock. The company continued to perform well even during the Coronavirus pandemic, especially when the other businesses reported huge losses.

Besides, Temple & Webster has a strong balance sheet and thus has a greater scope to execute its long-term strategies and gain returns. In addition, the company is trying to bolster its customer base via improved technology by investing in data & personalisation, and delivery experience. 

The company expects to maintain an EBITDA margin between 2% to 4% and increase revenue by cashing on longer-term online market penetration.

To read half year performance of TPW, read Temple & Webster (ASX:TPW) declares impressive H1 FY21 results amid COVID-19 challenges

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