Temple & Webster Add $3.18 Million to Market Cap in One Morning

Temple & Webster Group [ASX:TPW] climbed up 22.2% this morning to 16.5 cents per share.

The climb added $3.18 million to TPW’s market cap. Not bad for a company dubbed the worst float of 2016.

What Happened?

This morning, Temple & Webster announced that FY17 revenues would be up approximately 4% and earnings would improve by 50%. CEO Mark Coulter told investors:

Q4 FY17 will be our strongest quarter in our turnaround journey. We have reduced our Q4 EBITDA [earnings before interest, tax, depreciation and amortisation] loss to ~$0.5m, a significant improvement from a loss of $3.1m in the prior year corresponding period.

Coulter now expects the company to become profitable by calendar year 2018, achieving profitability when revenues hit $70-90 million.

What Now?

Be wary of unprofitable companies. Unless they have assets to back up their market valuation, you could be paying for predictions rather than actual earnings.

Having said that, Temple & Webster is not doing anything different from other successful online retailers. As more shoppers shift from in-store to online, you’d expect Temple & Webster to capture more of the market.

But like I said, be wary. Basing an investment off assumptions isn’t a remedy for a good night’s sleep. Instead, I’d suggest you dig a little deeper into the company’s strategy plans going forward, and jump in when profitability emerges.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

PS: If you’re interested in investing in smaller growth stocks, check out Sam Volkering’s new report, ‘Top Three Aussie Small-Cap Stocks’.

Sam is a small-cap guru. He’s managed to find growth in a market where many investment professionals simply can’t find any.

To get your free copy of Sam’s report, click here.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia