The Temple & Webster Group Ltd (ASX: TPW) share price is on fire today, rising by more than 9%. Here’s why this growth share is so popular
The post ASX stock of the day: Temple & Webster (ASX:TPW) goes from strength to strength appeared first on The Motley Fool Australia. –
The Temple & Webster Group Ltd (ASX: TPW) share price continues to deliver for shareholders. At the time of writing, TPW shares are up a healthy 8.76% to $11.05 a share. That gives this ASX growth star a market capitalisation of $1.33 billion and a price-to-earnings (P/E) ratio of 94.66.
Even though it has seen a hefty jump in valuation today, the Temple & Webster share price is still a ways from the 52-week high of $14.05 a share we saw back in October.
So who is Temple & Webster? And just how much has this company grown over the past few years?
Furniture at your door
Temple & Webster is an online marketplace dedicated to furniture, decor, and all things ‘home’. The company launched in 2011.
According to the company, its name comes from William Temple and John Webster, who were “convict artisans” commissioned to make fine furniture for Governor Lachlan Macquarie in the early 1820s.
Unlike furniture/homewares retailers such as Harvey Norman Holdings Limited (ASX: HVN) and Nick Scali Limited (ASX: NCK), which happen to be Temple & Webster’s competitors, this company is online only.
Its online store offers products as diverse as wall art, lighting, rugs, board games, gym equipment, turntables, and bird cages. That’s all in addition to every piece of furniture you can think of, including beds, lounges, and dining tables.
The company offers payment through a range of buy now, pay later (BNPL) providers like PayPal Holdings Inc (NASDAQ: PYPL), Zip Co Ltd (ASX: Z1P), Humm Group Ltd (ASX: HUM), and (of course) Afterpay Ltd (ASX: APT).
Why are Temple & Webster shares so popular?
Even though today’s market moves have propelled Temple & Webster almost 9% higher, there has been no major news out of the company that might provoke such a decisive gain.
My Fool colleague James Mickleboro postulated this morning that a possible reason could be a half-year earnings report from property classifieds giant REA Group Ltd (ASX: REA). REA spoke positively about the Australian housing market in its update, which investors may have determined might mean higher demand for Temple & Webster’s products.
But Temple & Webster has a very strong track record of its own. Temple & Webster shares are up more than 186% over the past 12 months, and up more than 1,700% over the past 5 years. Needless to say, this company has been growing fast.
Just this week, the company delivered its earnings results for the 6 months to 31 December 2020. Temple & Webster reported year-on-year revenue growth of 118% to $161.6 million, assisted by active customer growth of 102%. That helped the company post earnings before interest, tax, depreciation, and amortisation (EBITDA) of $14.8 million, which was up a staggering 556% year on year.
Temple & Webster is one of the few ASX companies that have enjoyed a boon from the pandemic and associated lockdowns. Furniture was one of the few areas left that investors might have assumed online retailers would not disrupt — 2020 and COVID-19 turned that logic on its head.
Excitement over the company’s future, as well as the REA report this morning, is probably the reason behind the Temple & Webster share price outperformance today. It will be interesting to see what 2021 brings!
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Temple & Webster Group Ltd, and ZIPCOLTD FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Humm Group Limited, PayPal Holdings, REA Group Limited, and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.