A rare buying opportunity in 1 of Australia’s top shares?

The Temple & Webster Group Ltd (ASX: TPW) share price has fallen by a huge amount, it’s down by around 80% in the past year, as the chart below shows. I think the opportunity on offer makes it one of Australia’s top shares.

It’s rare for a growing business to fall by that much. Temple & Webster’s revenue may not grow in FY27, but it has a long history of delivering growth.

The current economic environment is tough for households, but I think it’s a rare situation and the decline could be a great time to take advantage.

Let’s run through why I think it’s a strong long-term buy today.

Great revenue opportunity

In its FY26 presentation, the company highlighted that the Australian furniture and homewares market is approximately $19 billion.

Adoption of online shopping has grown significantly since 2019. Over time, I expect Australia’s e-commerce rate to increase towards what’s seen in the UK and the US, which could help Temple & Webster’s market share.

At the latest measurement, Temple & Webster’s market share in Australian furniture and homewares reached 2.9%.

The company sells hundreds of thousands of products and more than half of its revenue is from exclusive products, with 83% of the top 500 selling products in FY26 being exclusive.

Temple & Webster regularly expands its private label range, giving the company more scope to capture more of the value of the sale. Currently, most products ship directly from suppliers to customers, giving Temple & Webster a capital-light business model and, in my view, making it one of Australia’s top shares.

Higher profit margins expected

In the coming years, I’m expecting the business to deliver rising profit margins.

The company is targeting $33 million to $40 million of operating profit (EBITDA) in FY27, while retaining flexibility to use its ‘delivered margin’ and marketing “levers” to respond to market conditions and drive revenue growth.

FY26’s EBITDA margin was 3.3%. The company expects the EBITDA margin to rise to between 5% to 6% in FY27 and reach at least 15% in the long-term.

To achieve that higher profit margin in the longer-term, it expects to achieve a delivered margin of more than 33% (it was 30.2% in FY26), a delivered margin after marketing costs of more than 22% (15% in FY26) and a contribution margin of more than 20% (13.4% in FY26).

If margins keep climbing towards those numbers, I think the company will go some way to justifying itself as one of Australia’s top shares.

Initiatives that should help include a lower fixed cost as a percentage of revenue (thanks to revenue growth), a company-wide approach to AI adoption to boost revenue and lower costs, and an ongoing review of potential cost savings or improved efficiencies.

Additional growth avenues

The third reason to like this business as one of Australia’s top shares is because of the company has found ways to expand its growth potential with additional revenue streams from home improvement, trade and commercial, and New Zealand sales.

In FY26, its home improvement segment saw revenue growth of 39% to $59 million, trade and commercial grew revenue by 16% to $56 million and New Zealand delivered approximately $3 million of revenue in its first eight months (running at a contribution breakeven level).

I don’t know what FY27 holds for those three segments, but I think the long-term looks very promising, particularly for home improvement with how there isn’t a dominant player in that retail sector.

I think it looks cheap now after falling about 80% over the past year, at the time of writing. I’d be very happy to buy Temple & Webster shares.

The post A rare buying opportunity in 1 of Australia’s top shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Temple & Webster Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.