Corsair Gaming (CRSR) – Due Diligence (DD) – Semi-Long Post.

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by DHK007

Corsair Gaming (DD)

Corsair is a very reputable company that has existed since 1994. CRSR are the leaders in making extreme high quality PC Components (RAM, Coolers, Power Supplies, Keyboard, Mouse, PC Cases, Gaming Headsets) and now venturing into Esports as a leading company. If you have built your own custom PC you probably have a corsair part in there. Extremely reputable company in the gaming world and known to be high quality and very durable parts with mostly high ratings.

Corsair started its IPO at $17.25 per share in September 2020 having lasted 3 months. Since then it’s current at $33.50 up 90% since inception. It’s high point is 51.26 and now experiencing a pullback. where it’s now valued at $33.50.

Let’s take a look at Q3 Results. Let’s compare it to its established competitor: Logitech trading at approximately $85

Corsair (Year to Year Growth)seekingalpha.com/article/4387552-corsair-gaming-inc-2020-q3-results-earnings-call-presentation

ir.corsair.com/static-files/58b4afc1-54f5-4fca-9bd9-c155effabcf1

Net Revenue: +60.7%
Gross Profit: +112.4%
Operating Income: +353.6%
Net Income: +2293.5% !!!!
Adjust Net Income: +384%
Cash Flow: 24.7million in 2020 vs 2.1million in 2019.

Logitech:
Net Revenue: +73%
Gross Profit: +108%
Operating Income: +18%
Net Income: +276%

Implications? Corsair is AGGRESSIVELY EXPANDING. Look at that operating income increase. They’re meeting their expectations with their aggressive expansion Corsair is growing faster than Logitech in terms of raw numbers. Cash flows shows what a great health state it is in moving forward and how they pose as a serious competitor to LOGI (Logitech) moving forward. Seems like a good mid/small cap growth stock.

We could go more into the numbers if you’d like using its PPT but the numbers look solid all across.

Institutional Ownership:Corsair is 91% owned by institutions

fintel.io/so/us/crsr

Owned by JPMorgan, Blackrock, Citadel Goldman Sachs etc.

It’s a company that institutions believe in as they hold 91% of the shares!! The worrisomee is that comes with this is that there it’s usually missing the volume as opposed to recently popular debuts like Palantir and Airbnb. A lot of long term investors are locked in (myself included) and there’s little volume movement (1.5m on average), price is a bit volatile.

The Catalysts:

This black friday/Cyber Monday was different due to Covid. there was an increase in gaming supplies as countries are forced to lockdown and people have nothing to do. It’s reported that most of popular Corsair products that went on Sale were sold out BF/CM and Corsair completely ran out of stock. $$$.ir.corsair.com/static-files/10cfa2da-de15-40d3-aa82-31c9c7145e80

An excerpt: CEO Paul, “We believe Corsair is at the center of this growing trend with our wide range of gaming and streaming products. This last quarter was one with very strong demand, with many major retailers running out of stock of our gear. Our stock situation has gotten better but only a small part of Q3 revenue came from restocking shelves, with most gear selling as soon as they hit the shelves. We are ramping up our supply chain and manufacturing partners as fast as possible, and we expect to thoughtfully be growing our channel inventory during the next few months, as well as supporting the continued high demand from our end customers. We recently released our new flagship gaming keyboard, the K100, which at $229 is the best keyboard we have built. We also recently launched two new microphones under our Elgato brand, Wave 1 and Wave 3, which were sold out within the first few days of launch. We continue to launch exciting new high performance products at a fast clip, with approximately one new product per week.”

Prior to the Black Friday/Cyber Monday: They were revising their 2020 outlook because they exceeded it by expecting Net Revenue from 1.616m to 1.631m and Adjusted EBITDA from 187m to 193m.With how they even did even better on BF/CM sales than they anticipated, expect higher results.

This Christmas is no different. Cyberpunk 2077 and lockdown still in place in US/Canada and other countries, people going to spending money on Corsair products yet again. This is in part with increased streamers in Youtube/Twitch that corsair is heavily investing in in terms of investing in a program for people to enroll to learn how to effectively stream and we can expect great things for the company in the future.

February 9 is the expected Q4 earnings.

Corsair is in a good position to easily beat out ER. As they already smashed their ER in Q3 by 0.26!!

Analysts Predictions:After Q3 Earnings the newest price target for analyst
Credit Suisse Group: $31
Barclays: $45
Robert W. Baird: $41
Cowen: $37
At least 7 Buy Ratings, None at Sell.

For this website:
www.tipranks.com/stocks/crsr/forecast
9 has a average price target of $38, with the tops being at $49.

Analysts would say Corsair is slightly undervalued at the moment.
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TL;DR Corsair Gaming is a company in a great position for both the short term, and long term and one of the ideal growth stocks moving forward. It’s worth taking a good hard look and a stock that will likely more than pay off in ~2months + easily barring sudden bad news.

Edit: I’d be happy to answer any questions you guys have and critical questions also help me to see if I did my job right, so keep on coming :D! I tried to be transparent in my DD as possible.Also, I vouch for Corsair moving forward however, please do your own DD before making financial decisions!

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.

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