Is Corsair a buy?
It’s time to talk about a new name to the market. Here is the breakdown on $CRSR, otherwise known as Corsair.
Current Price: $35.675
52/Wk High: $51.37
52/Wk Low: $14.09
Market Cap: $3.3 Billion
Read below for the breakdown!
Corsair ($CRSR) is a major provider of gear for content creators and gamers, with a specific focus on PC parts and PC peripherals. Given that both gaming and individual content creating have become so popular, Corsair has been on fire in recent months.
Corsair went public in September, and after a brief sell-off, the stock has rallied a huge 46.10% in just three months.
In recent news, Corsair launched a public offering, selling 7.5 million shares of Corsair common stock, which will be sold by certain stockholders.
Digging into the numbers Corsair beat expectations with an EPS of $0.54, better than the EPS estimate of $0.28. Not only did Corsair beat on EPS but saw plenty of growth under the hood as well.
Corsair reported net revenues of $457.1 million, representing a 60.7% increase on a year over year basis in revenues alone.
Furthermore, the gamer and creator peripherals segment turned out revenues of $161.6 million (Up 128.8% YoY) while the gaming components and systems segment turned out $295.5 million (Up 38.3% YoY) in revenues.
Corsair also reported a solid gross profit of $127.9 million, representing a whopping 112.4% increase on a year over year basis, all the while gross margin increased 680 basis points, landing at 28%.
Breaking down profits, the gamer and creator peripherals segment totaled $60 million (Up 200.8% YoY) gross profit, while the gaming components and systems segment totaled $67.9 million (Up 68.7% YoY) in gross profit.
The positive numbers didn’t stop there, with Corsair going on to report operating income of $49.7 million for Q3, representing a huge 353.6% increase. Secondly, net income totaled $36.4 million, much better than the same time 2019 level of $1.5 million.
Rounding out the quarter Corsair reported an adjusted EBITDA of $63.7 million, representing another huge increase of 184.9% year over year.
In general, management was positive about the quarter.
“This was a great quarter for us,” CEO Andy Paul said in a statement.
When it comes to guidance, management is bullish, releasing their full year 2020 outlook. Management expects revenues to total $1.616 billion to $1.631 billion for FY 2020, along with an adjusted operating income of $178 million to $184 million.
Shifting into the balance sheet the numbers are solid.
Total Debt: $370 Million
Total Liabilities: $867 Million
Total Assets: $1.256 Billion
Cash & Short Term Inv: $116 Million
As for valuation, Corsair is trading at a premium.
Price to Earnings: 49.43x
Price to Sales: 2.25x
Price to Book: 8.52x
Price to Cash Flow: 17.48x
Given the numbers the analysts are bullish with a mean price target of $40.25/share, representing a 12.59% upside from its current price.
It is also important to note that the high price target is $49.00/share, representing a 37.06% gain, while the low price target is $31.00/share, representing a -13.29% downside.
The big money is quite involved as well, with 91.12% of Corsair being owned by institutions. Top holders include EagleTree Capital, BlackRock Institutional Trust, and Citadel Advisors.
On a technical basis, Corsair could be flashing an opportunity. According to the six-month charts the MACD recently crossed back to the downside with significant momentum within a range of 0.8536 down to 0.3864.
The six-month charts are also indicating an RSI of 45.52 and CCI of -84.8187, both of which are on the lower end. On a final technical note, Corsair is currently testing the 50 day EMA.
In short, Corsair is a strong company with significant growth, a growing industry, and the backing of a video game era that continues to grow.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.