Indices are down and are in the correction territory as of last Friday, and fast-growing companies are no exception.
GrubHub Inc. (GRUB, Financial), a five-year-old online and mobile platform for restaurant pick up and delivery order company, has not escaped the market’s carnage.
The stock has now lost nearly half of its value, or 46%, for this quarter alone despite having beaten analyst earnings estimates consistently in the past year.
From January to September, the food delivery company has raised its revenue by 50.5% and its profits by 84% — growth rates that far exceed the giant FAANG stocks. GrubHub also sees further 40% revenue growth in its fourth-quarter operations.
As the country’s leading online food-ordering company, GrubHub also does not carry any significant amount of debt in its balance sheet brought by its strong business growth in the past half decade.
The company also just expanded to campus food ordering business through its $150 million acquisition of Tapingo last month.
Certainly, GrubHub’s niche is not immune to competition. Uber Eats, along with other similar companies, is growing rapidly and has taken some business from GrubHub. These threats should commonly be expected, especially with a fast-growing type of businesses. Nonetheless, GrubHub still has nearly 50% of the nation’s market share.
In the meantime, there is still some more room to go for GrubHub’s stock price to reach its 52-week bottom, but a clean balance sheet and strong business growth numbers should resonate with Mr. Market. When all of the broader market concerns subside, they could bring up the company’s value once more.
Analysts continuously see a profitable future for GrubHub in 2019 with a target price of $122.22 compared to $79.43 as of last Friday — a potential 54% upside.
Disclosure: Long GrubHub.
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