With Jumbo Interactive shares reaching new 52-week high over the last few weeks, we thought there’s no better time to revisit our thesis on JIN Shares and we present our Top 5 Reasons Why We See Jumbo Shares (JIN ASX) Rocketing Up!
Jumbo has been a core part of our portfolio for several years, and has made us excellent returns. Is Jumbo still a buy?
Current Market Cap and Fundamentals
Jumbo Shares (JIN ASX) currently trade on the Australian Stock Exchange at a price of $15.08 per share and a market cap of $941 million.
The JIN share price is reaching new 52-week highs. However, Jumbo Shares are still down about 50% since their all time highs of over $27 a share at the end of 2019.
Jumbo Shares trade on a Price/Earnings multiple of 36.13x.
Trading Update Half Year December 2020
The Jumbo share price seems to have started responding again after the company released their Half Year Trading Update to the market. The release was met with the shares falling significantly as the company delivered little in the way to appetize investors given the relatively high PE of 36x earnings.
Jumbo Interactive delivered modest gains of 9% for their Half Year revenue. However, NPAT trended down 8.6%. This is slightly disappointing. However, its worthwhile remembering that this is likely due to the lotto cycle. The lotto cycle is where as their are more jackpots more and more people are buying tickets. This in turn means more revenue for Jumbo and in turn typically moves the Jumbo Share Price upwards.
This half deliver only 15 large jackpot as compared to 23 in the PCP.
Jumbo announced a fully franked interim dividend of 18c per JIN Shares, Jumbo has a good dividend history with the occasional special dividend.
What About Jumbo’s SAAS Business?
Jumbo Interactive, provides a Software as a Service Solution to help provide solutions to companies whom which want to run a lottery under their own branding (white labelling). The SaaS business seems to have delivered some impressive comparable Half year results.
We believe investors are overlooking the significant upside opportunity in the Jumbo Share Price with the massive growth that is being experienced by their SaaS business.
Gatherwell Gaining Traction
Jumbo’s Acquisition of UK based business Gatherwell seems to be gaining traction with Gatherwell UK achieving their first earn-out milestone as at 9th November 2020.
Gatherwell posted in incredible EBITDA growth of 107%, revenue growth of 26% like-for-like half year.
Jumbo Shares Cash Position
One thing we really like at Prophet is the business being in a strong cash position. Jumbo has a Cash position of $61.9 million dollars as at 31 Dec 2020. Net Assets are $81.85million. Jumbo is well capitalized.
As always we surveyed a number of Prophet Invest community members and present the below sentiment values. We can see modest investor sentiment towards the hold classification.
Jumbo Shares: Prophet’s Take
Jumbo has been a core investment to us at Prophet. It was one of our first major holdings and one of our greatest and proudest moments. Whilst we don’t see the same amount of growth that has been previously experienced by the Jumbo Share Price (JIN ASX) we do continue to HOLD JIN shares in our portfolio. We think JIN will deliver modest returns into the near future.
Learn How We Analyze A Company:
What Are We Currently Buying?
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