Headquartered in Germany, Jumia Technologies AG (JMIA) is an e-commerce retailer that operates in African. Besides offering a marketplace platform, JMIA provides logistics and payments services across the continent. With a population of more than 1.20 billion people, JMIA has tapped into one of the biggest up and coming markets, with massive spending potential. As one of the primary e-commerce platforms operating on the continent, JMIA has the potential to grow significantly.
While the company has long possessed these characteristics, JMIA’s recent rally can be attributed to Citron Research’s position in the company. The research and investment management firm known for its short selling strategies reversed its position in October last year, helping JMIA gain 42.2% year-to-date.
This, coupled with several other factors, has helped the stock earn a Strong Buy rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates JMIA:
Trade Grade: A
JMIA is currently trading above its 50-day and 200-day moving averages of $42.51 and $21.15, respectively, indicating a golden-cross uptrend. In fact, the stock has gained 223.9% over the past three months, reflecting solid short-term bullishness.
In December , JMIA raised approximately $243.20 million through an offering of nearly eight million American Depositary shares. The offering’s proceeds are expected to fund the company’s general corporate expenses and business expansion strategies.
JMIA’s gross profits have increased 22% year-over-year to €23.20 million in the third quarter ended September 30, 2020. Jumia’s total payment volume has increased 50% from the same period last year to €48 million. The number of its annual active customers have grown 22.8% from the year-ago value to 5.50 million over this period.
Buy & Hold Grade: B
In terms of proximity to 52-week high, which is a key factor that our Buy & Hold Grade considers, JMIA is well-positioned. It is currently trading 12.4% below its 52-week high of $65.50, which it hit on January 25.
JMIA, which made its public debut by listing on NYSE in 2019, has often been called “Africa’s Amazon.” As one of the biggest e-commerce companies operating on the continent , its impressive growth track record has allowed the stock to soar since its IPO.
Peer Grade: A
JMIA is currently ranked #8 of 69 stocks in the Internet industry. Other popular stocks in this space are Alphabet, Inc. (GOOG), Sea Ltd. (SE) and eBay, Inc. (EBAY).
GOOG, SE and EBAY have gained 27.7%, 364% and 64.5%, respectively, over the past year. This compares to JMIA’s 682.7% returns over this period.
Industry Rank: A
The Internet industry is currently ranked #5 of 123 industries in the StockNews.com universe. As the name suggests, this group includes the tech savvy companies listed on U.S. stock exchanges. As one of the most profitable industries over the past year, the Internet industry was primarily responsible for driving the stock markets over the past year.
With remote lifestyles probably here to stay, the internet industry should continue to rally this year and beyond. Moreover, the 5G boom and integrated technology for vaccine distribution tracking should allow the industry to reach record highs in the coming months.
Overall POWR Rating: A (Strong Buy)
JMIA is rated Strong Buy due to solid short- and long-term bullishness, impressive financials and underlying industry strength, as determined by the four components of overall POWR Rating.
JMIA has been updating its business strategy to become an asset light third-party marketplace, which has already begun yielding results. This should allow the company to ramp up its revenues significantly in the near term, by facilitating transactions and third-party sellers. Moreover, as global tech giants invest in Africa to develop robust digital infrastructure there, the e-commerce platform should gain significantly as people there shift to digital shopping.
Analysts expect JMIA’s EPS to rise 17.7% in fiscal 2021. The company has an impressive earnings surprise history also; it surpassed the Street’s EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $219.60 million for the current year represents a 29.6% improvement year-over-year.
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JMIA shares were unchanged in after-hours trading Thursday. Year-to-date, JMIA has gained 39.90%, versus a 1.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More…
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