Just Eat orders grow, but share price keeps shrinking
This food delivery company now includes US business Grubhub. We take a look at this latest update.
15th July 2021 09:11
by Keith Bowman from interactive investor
This food delivery company now includes US business Grubhub. We take a look at this latest update.
First-half trading update
- Orders up 61% or 51% when including Grubhub
- Gross transaction value of €14.1 billion
“Unsurprisingly, and with Covid restrictions persisting across Just Eat Takeaway.com (LSE:JET) various national markets, these are strong numbers.Â
Half-year orders are up by 61%, or by 51% when allowing for the inclusion of the US business Grubhub. Delivery order growth in the UK came in at 733% over the first half of 2021 compared with the same period in 2020. Full-year 2021 orders for Just Eat and excluding Grubhub have been upgraded to more than 45% from a prior estimate of more than 42%.
Gross transaction value for the full year between both arms of the company is expected to be somewhere between €28 to €30 billion. Significantly, adjusted EBITDA losses are expected to have peaked, with a trend back to profitability expected.Â
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In all, and on the downside, intense competition and ongoing required investment spend continue to offer headwinds. Full clarity on Grubhub and the degree of investment required provides a key investor concern. Just Eat shares are down around 27% (as of close 14 July) since announcing the Grubhub deal back in June 2020 compared to a gain of almost 12% for the wider FTSE 100 index. Worries for slowing growth as Covid restrictions ease also play into the mix. Â Â
But a coming together with Takeway.com and Grubhub creates a food delivery company truly on the global stage. Partnerships with the likes of McDonald's (NYSE:MCD) and Greggs (LSE:GRG) in the UK are enticing customers. And the current emphasis on investment over profits appears to be playing the long-term game. For now, and despite reasons for caution, a consensus analyst target price of almost £97 per share leaves market opinion pointing to a 'buy'.
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