GrubHub Is A Strong Buy

GrubHub Inc. (GRUB) is an online and mobile food ordering company. The Company's platform assists diners in searching for a local restaurant, tracking the order and re-order for convenience. It operates within the United States and the United Kingdom. GrubHub Inc. is based in United States.

In the world of "disruptive" companies, we find numerous models similar to Uber. GrubHub is one such company. Like Uber, the company provides a transportation-based service. But here, the company delivers food to consumers who use an app to order online while skipping the "old school" delivery employee of the restaurant in favor of the "independent contractor" who just so happens to deliver food for GrubHub.

This stock has been on fire, and our BUY and STRONG BUY ratings were prescient. Last Wednesday, shares soared more than 23% as the underlying financials and company news continued to impress analysts and investors.

Despite operating in a space with numerous competitors--including the aforementioned Uber via its UberEats service, GrubHub has continued to post great earnings. For the second quarter, the Company posted revenues of $240 million, which is a 51% year-over-year increase from $159 million in the second quarter of 2017. Gross Food Sales grew 39% year-over-year to $1.2 billion, up from $880 million in the year ago period. Grubhub also announced it entered into an agreement to acquire Boston-based Level-Up--the leader in mobile diner engagement and payment solutions for national and regional restaurant brands.

Grubhub's founder and chief executive officer Matt Maloney noted that GrubHub "had a standout quarter, highlighted by a record number of new diners trying Grubhub for the first time. We generated robust order growth, while continuing our rapid delivery expansion and adding thousands of high-quality new restaurant partners."

In addition to gross food sales in excess of $1 billion quarterly and revenue-growth rates in excess of 40% for the last three quarters, GrubHub keeps inking deals with powerful players in fast food. They recently signed an agreement with Yum! brands. This deal gives the company access to huge outlets like Taco Bell Pizza Hut, and KFC. This means that the company has more than 85,000 restaurant partners.

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