"The company has a strong competitive position as the largest online marketplace for ordering takeout and delivery food in the U.S.," analysts said.
GrubHub should be able to exploit its networks effects and brand name recognition to continue to expand into what historically were telephone-pen-paper transactions, according to the analyst note.
Over the long term, its investments in delivery infrastructure should drive demand for more orders and should be a profitable business, the firm noted.
Separately, TheStreet Ratings team rates GRUBHUB INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRUBHUB INC (GRUB) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GRUB's very impressive revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues leaped by 50.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- GRUB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.55, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $30.42 million or 9.29% when compared to the same quarter last year. Despite an increase in cash flow, GRUBHUB INC's cash flow growth rate is still lower than the industry average growth rate of 41.51%.
- Compared to other companies in the Internet Software & Services industry and the overall market on the basis of return on equity, GRUBHUB INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- In its most recent trading session, GRUB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: GRUB Ratings Report