In another thread, Bear commented: “I have never even heard of GrubHub” and likewise Matt posted: “Outside of Motley Fool, never heard of Grub Hub.”
Almost 2 years ago on 5/19/2015, I brought up GRUB here in the following post, Any appetite for some GRUB:
http://discussion.fool.com/any-appetite-for-some-grub-31758671.a…
Back then, except for a very high P/E 110.86 and problematic increases in stock-based compensation, GRUB’s fundamentals and performance looked great, i.e., the company was operating in the black with zero debt, creating value (ROIC-WACC positive), and realizing explosive revenue growth and increasing EPS.
Although this aggressive, growth-oriented company kept on course firing all cylinders, the stock price slowly trended downward. I took a position in GRUB when the stock price dropped below $30/share. After a l-o-o-ong slow upward climb, today the GRUB stock price spiked upward 22.56% with a $7.90 price increase.
Here’s an update of my 5/19/2015 post.
GRUB
Market Cap. $ 3.69 B
Employees 1,518
52-wk high 44.58
4/27/17 Price 42.92
52-wk low 21.41
EV/EBITDA (mrq) 22.90
P/E (ttm) 74.00
Fwd P/E 32.03
P/B (mrq) 3.78
P/S (ttm) 7.48
The P/E has continued to drop from 110.86 on 5/15/2015 to today’s 74.00. The forward P/E 32.03 indicates a continuance of this downward trend,
————————————————————
KEY BUSINESS METRICS
To analyze the company’s business performance, determine financial forecasts and help develop long-term strategic plans, GRUB management reviews the following key business metrics:
Active Diners Daily Average Grubs Gross Food Sales
(a) (b) (c)
FY
2016 8,174,000 274,800 $ 2.998 B
2015 6,746,000 227,100 $ 2.354 B
2014 5,029,000 182,800 $ 1.787 B
2013(d) 3,421,000 107,900 $ 1.015 B
2012 986,000 62,000 $ 0.569 B
2011 689,000 45,700 $ 0.412 B
(a) active Diners are the number of unique diner accounts from which an order has been placed in the past twelve months through the Company’s platform. active Diners from the Grubhub Platform are included from the merger Date.
(b) Daily average Grubs are the number of revenue generating orders placed on the platform divided by the number of days for a given period.
(c) Gross Food Sales are the total value of food, beverages, taxes, prepaid gratuities, and any delivery fees processed through the Company’s platform. all revenue generating orders placed on the platform are included, but only the commissions from the transaction are recognized as revenues, which are a percentage of the total Gross Food Sales for such transaction.
(d) includes results for Seamless through the merger Date, and of Grubhub Holdings inc., for the remainder of the period.
The data in the above table show huge growth trends in all 3 business metrics and provide the basis and reasons for GRUB’s aggressive growth plan.
REVENUE Change NET INCOME Change EPS Change
FY ($ M) YoY ($ M) YoY Diluted YoY
2016 493.331 36.3% 49.557 30.1% 0.58 31.8%
2015 361.825 42.5% 38.077 56.9% 0.44 46.7%
2014 253.873 85.1% 24.263 259.6% 0.30 150.0%
2013 137.143 66.6% 6.747 -14.8% 0.12 -36.8%
2012 82.299 35.8% 7.919 -47.9% 0.19 -47.2%
2011 60.611 15.211 0.36
What more can I say, as this board favors such strong growth percentages. Keep in mind this company went public on April 4, 2014.
While gross margins are trending downward, operating and profit margins have stabilized.
MARGINS GRUB
GROSS:
2016 56.6%
2015 61.3%
2014 65.5%
2013 63.9%
2012 65.6%
OPERATING:
2016 17.0%
2015 17.1%
2014 17.7%
2013 10.9%
2012 10.8%
PROFIT:
2016 10.1%
2015 10.5%
2014 9.6%
2013 4.9%
2012 9.6%
———————————————————————
Return of Invested Capital (ROIC) have increased significantly.
FY ROIC
2016 8.16%
2015 7.43%
2014 5.23%
2013 2.38%
——————————————————————
GRUB has a rock solid capital structure.
CAPITAL STRUCTURE GRUB
Cash (mrq) $ 323.62 M
Working Capital $ 285.847 M
Total Debt (mrq) 0
Total Equity (mrq) $ 972.119 M
Total Capitalization $ 1,082.609 M
Debt/Equity (mrq) 0.0%
Debt/Capitalization 0.0%
Current ratio (mrq) 3.59
—————————————————————
GRUB has excellent FCF.
2016 $ 60.5 M
2015 $ 33.5 M
2014 $ 65.8 M
2013 $ 33.8 M
In February 2015, the GRUB acquired the assets of Diningin.com, inc. and certain of its affiliates and the membership units of Restaurants on the Run, llC, and, in December 2015, the Company acquired the membership units of mealport USa llC d/b/a Delivered Dish.
On May 5, 2016, the GRUB acquired all of the issued and outstanding capital stock of Kmlee investments inc. and laBite.com, inc., a restaurant delivery service.
—————————————————————-
Large annual increases in stock-based compensation remains a significant issue because these put a serious drag on the company’s free cash flow (FCF) that bear watching.
Stock-Based
FY Compensation
2016 $ 23.559 M
2015 $ 13.405 M
2014 $ 9.393 M
2013 $ 4.933 M
2012 $ 2.364 M
=========================================
I still favor this company’s strong fundamentals, value creation and performance that off-set its high P/E. The competition in this arena remains very fierce and requires investor vigilance.
As always, conduct your own due diligence and decision-making.
Regards,
Ray