In morning trade the Kogan.com Ltd (ASX: KGN) share price is shooting higher following the release of a business update.

At the time of writing the ecommerce company’s shares are up 5% to $8.80.

How is Kogan performing?

Last month Kogan released an update which revealed strong third quarter sales growth.

This was driven largely by a 50% jump in sales in March following the closure of retail stores nationally. Kogan’s gross profit also grew by over 50% during the month.

Pleasingly, this strong form has continued into April and the company has seen its sales and gross profit growth accelerate.

According to the release, Kogan’s sales grew by more than 100% in April compared to the prior corresponding period.

Things were even better in respect to profits. Its gross profit grew more than 150% and its adjusted EBITDA increased by more than 200% in April. This strong month means that Kogan’s adjusted EBITDA is now up 40% financial year to date compared to the same period in FY 2019.

This was despite the company investing heavily in building its brand and growing its active customers with its largest ever monthly marketing expense in April.

It certainly appears to have paid off. Kogan grew its active customers by 139,000 during the month to 1,948,000 customers.

Long term incentive plan.

In addition to its business update, the company advised that the Remuneration Committee is proposing to introduce a long term incentive (LTI) plan for its executive directors, Ruslan Kogan and David Shafer.

Kogan Chairman Greg Ridder explained: “Ruslan and David are outstanding business leaders. They have been fundamental in building and growing the high performing company we see today, and shareholders have been rewarded with an exceptional return on their investment since IPO.”

“Recent performance of the Company highlights the solid foundations of our business – with strong customer appeal, multiple revenue streams, diverse supply chains, and world-class proprietary systems and processes. The proposed LTI grant (which will be by way of options over ordinary shares) involves at-risk equity with an additional service condition of at least three years.”

“Other than usual annual reviews, no changes to the modest fixed remuneration of Ruslan and David are proposed. The Remuneration Committee has received advice from an independent expert and believe that the proposed option grant will generate long term shareholder value. We believe the grant is in the best interests of all shareholders,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The CSR Limited (ASX: CSR) share price will be in the spotlight today after it posted a big drop in underlying profits.

But the decline is better than what brokers were forecasting and could give the underperforming building supplies group a much-needed boost.

The CSR share price shed more than a quarter of its value since the start of the year when the S&P/ASX 200 Index (Index:^AXJO) lost 18% of its value.

COVID-19 impact on sector

Stocks exposed to housing construction have been doing it tough as the COVID-19 pandemic threatens to bring housing activity to its knees!

CSR’s peers, James Hardie Industries plc (ASX: JHX) and Boral Limited (ASX: BLD), have also been doing it tough. The JHX share price lost 22% and the BLD share price surrendered close to 40% since January.

Shareholders in CSR will be hoping for a bit of respite after management announced a 60.6% jump in full year net profit to $125.3 million.

NPAT beats expectations

This was due to impairment charges it took in the previous financial year, although if you excluded this, underlying net profit “only” declined 25.8% to $134.8 million.

I say “only” because consensus estimates were predicting a more than 30% plunge to around $120 million.

The group’s Building Products revenue fell 6% to $1.6 billion due to weakness in the housing market even before the COVID-19 outbreak, but this is a good number given that residential construction activity was down 21% on average.

Its aluminium business helped offset some of the losses with the division posting a 63% increase in earnings before interest and tax (EBIT). This isn’t unexpected as input costs stabilised in the second half of the year while the lower Australian dollar provided another uplift.

Building on solid ground

Investors will also find it reassuring that management is yet to notice any material impact from the coronavirus on its operations. The first few months of FY21, which started on 1 April, have been pretty steady with sales at its Building Products division dipping 3%.

CSR claims to have a strong balance sheet with net cash of $95 million, but management is taking no chances. It cancelled its final dividend, suspended its on-market share buyback and secured an additional $200 million in debt.

Foolish takeaway

But the group isn’t out of the woods. While the coronavirus hasn’t derailed demand for its products, management believes its only a matter of time before it’s impacted.

The problem is CSR doesn’t know when that might happen or to what extent earnings will suffer.

This is likely to temper broker’s willingness to upgrade their forecasts on the back of the better than expected FY20 profit results.

Shareholders should enjoy any bump in CSR’s share price today as it’s going to be an anxious few months.

More reading

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Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc. Connect with him on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Brokers may be upgrading this ASX stock even as it delivered a plunge in profits appeared first on Motley Fool Australia.

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