First of all, I’ve been a Grubhub stockholder since 2015, when I first posted here about this company on 5/19/2015
http://discussion.fool.com/any-appetite-for-some-grub-31758671.a…
with subsequent updates on 4/27/2017
http://discussion.fool.com/grubhub-grub-revisited-32691575.aspx
and supposedly my last on 3/15/2018.
http://discussion.fool.com/final-update-grubhub-delivers-big-tim…
But I decided to post an updated reprise because on 7/24/2018, after Grubhub released their Q2 2018 earnings report, their stock price spiked up almost 24% to $134.73/share from $109.06 (the previous day’s closing price) on extraordinary heavy trading volume of 11.17 M vs. average volume 1.74 M. So, here’s my updated reprise, now that Whitemamba 33 has raised some interest in his recent post.
CORPORATE FINANCIALS
Since their 4/4/2014 IPO, Grubhub has been operating in the black. Overall, Corporate financials for Grubhub show the following;
• Strong substantial growth trend in YoY annual and quarterly revenue, i.e.,
(a) 43%, 36% and 38% for FY 2015, 2016 and 2017, respectively;
(b) 39%, 32%, 32%, 49%, 49% and 51% for the 6 consecutive quarters from Q1 2017 through Q2 2018.
• Strong substantial growth trend in YoY annual and quarterly net income and earnings (both Non-GAAP and GAAP) that significantly and substantially outpace their respective annual and quarterly revenue growth for FY 2017 and Q4 2017, Q1 2018 and Q2 2018.
The Grubhub Key Business Metrics indicate the following:
• Active diners grew 70% YoY to 15.6 million in Q2 2018, including approximately 4 million diners from the Eat24 acquisition. Excluding these Eat24 diners, organic Grubhub diner growth was consistent with the strong trends the company saw in the Q1 2018. Grubhub added more than 0.5 million active diners in Q2 2018.
• Daily Average Grubs grew 35% YoY to 423,200 in Q2 2018 from 313,900 in Q2 2017.
• Gross Food Sales grew 39% YoY to $1.2 billion in Q2 2018 from $880 million in Q2 2017.
Revenue, New Income and Earnings (Non-GAAP and GAAP)
**Non-GAAP Non-GAAP GAAP GAAP**
**REVENUE Change NET INCOME Change EPS diluted Change NET INCOME Change EPS diluted Change**
**FY/QTR ($M) YoY ($M) YoY ($) YoY ($M) YoY ($) YoY**
Q2 ‘18 240 51% 46 99% 0.50 92% 30 104% 0.33 94%
Q1 ‘18 233 49% 47 88% 0.52 79% 31 74% 0.34 70%
**FY 2017 683 38% 106 39% 1.20 35% 99 100% 1.12 93%**
Q4 ‘17 205 49% 33 68% 0.37 61% 54 293% 0.60 275%
Q3 ‘17 163 32% 25 23% 0.28 22% 13 (1%) 0.15 0%
Q2 ‘17 159 32% 23 19% 0.26 13% 15 15% 0.17 13%
Q1 ‘17 156 39% 25 46% 0.29 45% 18 78% 0.20 67%
**FY 2016 493 36% 77 32% 0.89 31% 50 30% 0.58 32%**
Q4 ‘16 137 20 0.23 14 0.16
Q3 ‘16 123 20 0.23 13 0.15
Q2 ‘16 120 20 0.23 13 0.15
Q1 ‘16 112 17 0.20 10 0.12
**FY 2015 362 43% 58 51% 0.68 45% 38 57% 0.44 47%**
**FY 2014 254 39 0.47 24 0.30**
Key Business Metrics
To analyze the company’s business performance, determine financial forecasts and help develop long-term strategic plans, Grubhub management reviews the following key business metrics:
**Daily Gross**
**FY/QTR Active Diners Change Average Grubs Change Food Sales Change**
**(a) Y-o-Y (b) Y-o-Y (c) Y-o-Y**
Q2 '18 15,581,000 69.7% 423,200 34.8% $ 1.220 B 38.7%
Q1 '18 15,078,000 72.3% 436,900 32.5% $ 1.245 B 38.6%
2017(d) 14,462,000 76.9% 334,000 21.5% $ 3.784 B 26.2%
2016 8,174,000 21.2% 274,800 21.0% $ 2.998 B 27.3%
2015 6,746,000 34.1% 227,100 24.2% $ 2.354 B 31.7%
2014 5,029,000 47.0% 182,800 69.4% $ 1.787 B 76.0%
2013(e) 3,421,000 246.9% 107,900 74.0% $ 1.015 B 78.3%
2012 986,000 43.1% 62,000 35.7% $ 0.569 B 38.1%
2011 689,000 45,700 $ 0.412 B
Notes:
(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 of more than 4 million diners from the acquisition of Eat24.
(e) includes results for Seamless through the merger Date, and of Grubhub Holdings inc., for the remainder of the period.
Corporate Guidance:
Third Quarter and Full Year 2018 Guidance
Based on information available as of July 25, 2018, Grubhub provides the following financial guidance for the third quarter and full year of 2018. This guidance excludes any impact from the potential acquisition of LevelUp, which has not yet closed and is subject to standard closing conditions:
**Expected**
**Q3 2018 GUIDANCE Q3 2017 YoY Change**
Revenue range $ 232 M to $ 240 M $ 163.059 M **42% to 47%**
Adjusted EBITDA range $ 58 M to $ 64 M
**Expected**
**FY 2018 GUIDANCE FY 2017 YoY Change**
Revenue range $ 966 M to $ 983 M $ 683.067 M **41% to 44%**
Adjusted EBITDA range $ 256 M to $ 270 M
Current Financial and Stock Price Status
The following table shows financial status from my initial Grubhub post on 5/19/2015 to present:
**7/25/2018 3/13/2018 04/27/2017 05/15/2015**
MARKET CAP $ 12.16 B $ 9.53 B $ 3.69 B $ 3.35 B
Employees 2,125 2,125 1,518
52-WEEK HIGH 138.85 112.41 44.58 47.95
PRICE/SHARE 134.73 109.25 42.92 39.91
52-WEEK LOW 45.45 32.43 21.41 29.99
EV/EBITDA (mrq) 61.80 68.02 22.90
P/E (ttm) 107.01 97.54 74.00 110.86
Fwd P/E 60.15 48.77 32.03 50.00
P/B (mrq) 10.16 6.48 3.78 4.12
P/S (ttm) 16.01 13.95 7.48 11.81
EV/Revenue 12.68
Price Y-T-D change 87.6%
Price 52-wk change 131.85%
S&P500 52-wk change 13.83%
The table shows the following:
• Market Cap grew 3.6X.
• GRUB stock price grew 3.4 X (from $39.91 in 2015 to $134.73 today).
• GRUB stock price is up 88% Y-T-D and 132% over the recent past 52-week period.
• Explosive growth in stock price, in turn, has caused increases in EV/EBITDA, P/E, EV/Revenue and P/S.
The following Big Chart shows Grubhub (GRUB) superbly outperforming the S&P 500 over the recent 52-week period, framed and tracking between Nutanix (NTNX) and Shopify (SHOP), two favorites of this board.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?..
Here’s the Big Chart Y-T-D performance where GRUB is substantially outperforming the S&P 500, NTNX and SHOP.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?..
Margins
Decreasing gross and operating margins need investor vigilance. The acquisition of LevelUp should help improve operating margins - see Corporate Management section.
**MARGINS GROSS OPERATING PROFIT**
Q1 ‘18 51.2% 13.6% 13.2%
FY 2017 52.3% 13.1% 14.5%
FY 2016 56.6% 17.0% 10.1%
FY 2015 61.3% 17.1% 10.5%
FY 2014 65.5% 17.7% 9.6%
ROIC-WAAC Spread
Return of Invested Capital (ROIC) has increased significantly.
**FY ROIC**
2017 11.78%
2016 8.16%
2015 7.43%
2014 5.23%
2013 2.38%
As of 7/25/2018, Grubhub is creating 8.1 cents of pure economic value for every dollar invested.
ROIC 13.95%
WACC 5.85%
EVA 8.10%
Free Cash Flow
Grubhub has strong increasing FCF.
**Period FCF**
QTR
Q1 ’18 $59.8 M
FY
2017 $ 87.3 M
2016 $ 60.5 M
2015 $ 33.5 M
2014 $ 65.8 M
2013 $ 33.8 M
Capital Structure
GrubHub has maintained a rock solid capital structure as shown in the following table:
**CAPITAL STRUCTURE 7/25/2018 3/13/2018 4/27/2017**
Cash & equivalents (mrq) 442.678 M 234.090 M 323.62 M
Working Capital 420.405 M 185.935 M 285.847 M
Current ratio (mrq) 2.10 2.06 3.59
LT Debt (mrq) 116.598 M 173.551 M 0
Stockholders' Equity (mrq) 1,396.408 M 1,117.816 M 972.119 M
LT Debt/Equity (mrq) 8.3% 15.2% 0.0%
LT Debt/Capitalization 7.7% 13.4% 0.0%
Stock-based Compensation
Stock-based compensation to revenue ratios are substantially below the generally accepted 10% upper limit.
**Stock-Based**
**FY Compensation SBC/revenue**
2017 $ 32.748 M 4.8%
2016 $ 23.559 M 4.8%
2015 $ 13.405 M 3.7%
2014 $ 9.393 M 3.7%
2013 $ 4.933 M 3.6%
2012 $ 2.364 M 2.9%
==================================
CORPORATE MANAGEMENT
The Chicago-based company was launched by two young entrepreneurs, co-founders Matt Maloney (CEO) and Mike Evans (COO), in 2004 as a private entity and went public on April 4, 2014. Grubhub priced its shares at $26 ahead of the IPO, but the stock opened at $40 in its market debut, pushing the company’s market cap above $3 billion. So, GRUB started trading at a premium, up 53%.
Grubhub co-founder Mike Evans decided to leave the company after its public offering in April 2014. Evans lived out every founder’s dream. After a decade of hard work, he watched his company finally go public and got very rich in the process. Although Evans left with his technical expertise developing all the algorithms for the business model, he trained the GRUB technical staff well to continue on without him.
Corporate management under the leadership of founder Matt Maloney continues to be strong and focused on achieving its very aggressive growth plan.
BTW, regarding insider ownership, Marketbeat shows a current insider ownership percentage of 2.37% and provides a complete history of Grubhub insider trading from the beginning 4/9/2014 to the present 7/20/2018 and identifies shares held by insiders after transactions.
https://www.marketbeat.com/stocks/NYSE/GRUB/insider-trades/
Clicking the document icon under “Details” in the far right column will pull up the SEC Form 4 for the individual insider, say, CEO Mathew Maloney. Clicking Maloney’s name on Form 4 will pull up all his SEC filings by Grubhub.
Another way to find out the number of common stock held and traded by a specific insider is provided in the following post by earslookin:
http://discussion.fool.com/kevin-when-you-can39t-find-a-def-14-y…
The earslookin method produces:
(a) the SEC Form S-1 for Grubhub that identifies all the original insiders by name and their allotment of company shares.
https://www.sec.gov/Archives/edgar/data/1594109/000119312514…
and
(b) a listing of all SEC Form 4 filings by Grubhub for insider CEO Mathew Maloney.
[https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&a…](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001556458\)
Grubhub Partners with Jack in the Box® to Bring Food Directly to Diners’ Homes
On 05/10/2018, Grubhub, the nation’s leading online and mobile food-ordering company, announced it is partnering with Jack in the Box® to provide delivery for hundreds of locations across the country. Grubhub’s leading network of 15 million active diners will now be able to enjoy popular Jack in the Box menu items such as the delicious Buttery Jack® burger, seasoned curly or regular fries and the fan favorite two tacos, simply by ordering from Grubhub’s online and mobile platforms.
Additionally, the two companies are working together to incorporate Grubhub’s groundbreaking point-of-sale (POS) integration into Jack in the Box’s in-house system, which allows restaurant operators to manage all of their orders, both in-house and delivery, from one device. Grubhub’s POS integration raises the bar for in-house restaurant technology efficiency by eliminating the need to use multiple tablets, offering restaurant employees a streamlined restaurant operations experience. This means more time for staff to focus on what matters most: serving up delicious food.
https://investors.grubhub.com/investors/press-releases/press…
LevelUp Acquisition
LevelUp’s world-class technology and team will simplify Grubhub’s integrations with the nation’s top restaurant brands, provide more channels to attract and engage diners, and position us to dramatically accelerate product development for valuable restaurant-facing tools.
With the addition of LevelUp, Grubhub will offer national and independent restaurants the industry’s most comprehensive solution to drive online delivery and pickup orders, from demand generation through fulfillment. In addition to making it easier for restaurants like KFC, Taco Bell, Bareburger, and Roti to integrate with the Grubhub marketplace, LevelUp accelerates Grubhub’s existing point-of-sale (POS) integration capabilities and provides restaurants with powerful CRM and analytical tools to help them drive more diners to their platform and increase volume from existing diners.
“For the last seven years, the LevelUp team has worked to provide our restaurant partners with a complete solution to engage customers in this rapidly evolving digital landscape,” said Seth Priebatsch, LevelUp’s founder and chief executive officer. "By becoming a part of Grubhub, we take our biggest and most exciting step in achieving that mission. Together, we will provide restaurants with everything they need to grow profitably as more and more diners opt for the convenience, transparency and control of ordering online.”
Grubhub has entered into a definitive agreement to acquire LevelUp for $390 million in cash, subject to standard closing conditions, including the expiration of U.S. antitrust waiting periods. The transaction is expected to be funded through cash on hand and Grubhub’s existing credit facility.
SUMMARY
Right now, Grubhub is a HOLD investment in my family’s portfolios as this company continues on its explosive growth-oriented course. It’s amazing that Grubhub for the first time exceeded 50% in YoY quarterly revenue growth for Q2 2018!
For those interested, here are some findings from Putnid’s TA “Tricks of the Trade” referenced websites as of 7/26/18.
100% BUY - Current Strength: top 1%; Current Direction strongest top 1%.
https://www.barchart.com/stocks/quotes/GRUB/opinion
Summary: BUY
Moving Averages: STRONG BUY
https://www.tradingview.com/symbols/NYSE-GRUB/technicals/
Grade: A
https://swingtradebot.com/equities/GRUB
Overall: 65% mild bullish
https://www.stockconsultant.com/consultnow/basicplus.cgi?sym…
For TA experts
https://www.barchart.com/stocks/quotes/GRUB/cheat-sheet
As always, conduct your own due diligence and decision-making.
Bon appét*t! Saul, TMF would not allow me to submit my post with the “i” in place because it created
profanity. What!!!
Regards,
Ray