Interactive Investor

ii view: Just Eat Takeaway sales rocket under lockdowns

12th August 2020 15:35

Keith Bowman from interactive investor

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An enlarged European company, the tailwind of Covid and a move Stateside all excite investors. 

First-half results 

  • Revenue up 44% to €1.03 billion
  • Adjusted profit (EBITDA) up 133% to €177 million
  • A loss of €158 million compared to a loss of €27 million  

Chief executive Jitse Groen said:

"Just Eat Takeaway.com is in the fortunate position to benefit from continuing tailwinds. The United Kingdom, Germany, Canada, the Netherlands, Australia, and Brazil are performing particularly strongly. Our businesses have healthy gross margins, and all our segments are adjusted EBITDA positive. On the back of the current momentum, we started an aggressive investment programme, which we believe will further strengthen our market positions. We are convinced that our order growth will remain strong for the remainder of the year."

ii round-up:

Online food ordering company Just Eat Takeaway.com (LSE:JET) reported a 44% jump in sales, pushed higher by record numbers of new restaurants and active customers using its service under pandemic lockdowns. Adjusted profit more than doubled to €177 million.

Just Eat shares rose by more than 6% in UK trading and are up by more than 50% since late March. Shares for other online platforms such as Rightmove (LSE:RMV) and Auto Trader (LSE:AUTO) are up by a similar amount since late March. 

Earlier in the year, Just Eat and Dutch company Takeaway.com combined under a £6 billion deal. In June, it launched a deal to buy US business GrubHub (NYSE:GRUB) for £5.75 billion. The combination will, if completed, create a global food delivery giant. Subject to satisfaction of conditions, the deal is expected to complete in the first half of 2021.  

Just Eat Takeaway processed 257 million orders in the six-month period, a near one third jump from the first half of 2019, driven by strong accelerated order growth in the second quarter under pandemic lockdowns.

Sales in Germany more than doubled, grew by 49% in Canada and by 28% in the UK. Restaurants using its service rose by nearly a third, while active customers rose by just over a fifth to 54 million. 

When allowing for costs under the coming together of Just Eat and Takeaway.com, the combined company reported a loss of €158 million. 

ii view:

From a standing start in 2001, Just Eat has come a long way. It and its rivals have revolutionised the takeaway business. A choice of food to be delivered to the door is now just a few clicks away on a mobile phone. The newly combined Just Eat Takeaway.com competes with global rivals such as Uber Eats, Deliveroo and Delivery Hero (XETRA:DHER).    

For investors, the recent move by Amazon.com (NASDAQ:AMZN) to take a share stake in Deliveroo potentially raises the competition significantly. Amazon’s might and stock market value of over £1 trillion compares to Just Eat Takeaway’s of over £5 billion. 

But Just Eat's coming together with Takeway.com and potentially Grubhub in the not too distant future creates a food delivery company truly on the global stage. It will be one of the few profitable players in the industry. Together with Grubhub, it processed approximately 593 million orders in 2019 with more than 70 million combined active consumers globally. As such, any enlarged company will likely be on the menu of many investors.   

Positives: 

  • A potential combination with Grubhub moves it into the USA
  • A beneficiary of the pandemic & population lockdowns

Negatives:

  • Intensifying competition - Amazon has an interest in Deliveroo
  • An estimated price earnings ratio of over 200

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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