GRUB - Embedded Expectations Analysis - 2019 11 04
Grubhub Inc. (GRUB:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Earnings, with a 22.5x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management appears concerned about growth, pricing pressures, and driver efficiencies.Specifically, management may lack confidence in their ability to sustain net active diner growth and to improve driver efficiency through the remainder of 2019. Furthermore, they may be concerned about the value of their loyalty program and about pricing pressures from competitors. Finally, they may be concerned about further declines in calculated orders per active diner, and they may lack confidence in their ability to sustain year-over-year EBITDA per order improvement.
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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