GrubHub (GRUB) revisited

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:…

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.

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,


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)
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.

2016	56.6%
2015	61.3%
2014	65.5%
2013	63.9%
2012	65.6%
2016	17.0%
2015	17.1%
2014	17.7%
2013	10.9%
2012	10.8%
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.

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, 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, 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.

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.



Just had to say, Ray, that I appreciate the time and effort you took to describe GRUB to us. I’m not one to invest in consumer discretionary stocks, but I admire your effort!

1 Like

This is not a moat stock. In our area there are at least 7 companies competing with Grubhub. In one business I am familiar with, Postmates consistently is number 1 with Uber and Grubhub trailing.


Yeh I have heard Postmates gets rave reviews. I too am worried about:

  1. lack of moat
  2. lack of international scaling ambition and slow scaling within the US
  3. potential disintermediation of these companies by Amazon, Facebook etc
  4. Still very high trailing P/E

I probably entered at a similar time as Imuafool but have had this stock on my re-consider list. I worry that it will boom until the point when it doesn’t and that point it could die pretty quickly.

J214: In one business I am familiar with, Postmates consistently is number 1 with Uber and Grubhub trailing.

Since no reference is provided to support the above statement, would you kindly define what “number 1” means and cite the source and date. Is Postmates No. 1 in customer preference, customer satisfaction, monthly orders, revenues, gross merchandise volume (GMV), or another category and No. 1 where, i.e., in the U.S. or your state, county or city?

According to a 3/9/2017 Forbes article, the CEO of Postmates, a private company that to date has not realized any profits, related that the company had achieved an annualized run rate of $1 billion gross merchandise volume (GMV), or the total sales volume of food and other goods ordered on the Postmates platform projected over a year and that Postmates’ corresponding revenue run rate for the same time period was $250 million. In comparison, GrubHub leads the industry with just under $3 billion GMV and $493 million revenue in FY2016 on more than 8 million average monthly orders.…

The OP clearly states that the competition in this arena remains very fierce and requires investor vigilance (which means no moat). So it’s possible that in the future, Postmates as well as others could outdo GrubHub. Also according to a July 15, 2016 food delivery market study, Morgan Stanley analysts reported that this market, currently valued at about $11 billion, has the potential to be worth about $210 billion over the long term.…

Here’s another take in a 9/7/2016 Business Insider article:…

"Although some industry leaders are processing hundreds of millions, even billions, in annual food sales volume already, they’re a drop in the bucket in terms of the total addressable market (TAM) for food delivery, which is valued at $210 billion, according to Morgan Stanley Research estimates.
Companies are adopting diverse business models in the market to deliver these meals; some, like Postmates, are focused on the logistics of delivering food, while end-to-end providers like Sprig cook, facilitate ordering, and deliver the food themselves. Ultimately, order-focused platforms like Grubhub/Seamless and Eat24 appear to hold the strongest positions in the market. The former controlled an estimated 59% of total order volume in 2015, while Eat24 held an estimated 7% share. Moreover, Grubhub/Seamless could pose a threat to the logistics companies DoorDash and Postmates if it pushes further into proprietary delivery services, especially in markets its competitors haven’t expanded to yet.”

This arena is wide open to all comers as the battles continue on.