GRUB - Embedded Expectations Analysis - 2019 08 09
GrubHub Inc. (GRUB:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.2x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management has concerns about margins, costs, and driver efficiency.Specifically, management may be concerned about the sustainability of recent profitability per order improvements and about their ability to manage diner attrition rates. Additionally, they may lack confidence in their ability to maintain their diner fee structure, and may be concerned about the value of their aggressive marketing and delivery market launch efforts. Moreover, they may lack confidence in their ability to sustain recent net revenue growth and order volume growth, and they appear concerned about the sustainability of recent driver efficiency improvements. Finally, they appear concerned about rising cost per new diner, and may be concerned about rising technology costs driven by the engineers they acquired through their LevelUp and Tapingo acquisitions.
Grubhub and its wholly-owned subsidiaries provide an online and mobile platform for restaurant pick-up and delivery orders. The company connects diners and restaurants through restaurant technology and platforms. Diners enter their delivery address or use geo-location within the mobile applications and the company displays the menus and other relevant information for restaurants in its network. Orders may be placed directly online, via mobile applications or over the phone. The company primarily charges the restaurant a per order commission that is fee based. In several markets, the company also provides delivery services to restaurants on its platform that do not have their own delivery operations.
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