Down 70%, Is Grubhub Still a Hot Stock?
Grubhub (NYSE: GRUB) hit an all-time high of approximately $146 in September 2018, but the stock has been bad news ever since. Shares fell steeply to $70 in Q4 of that year, bounced around that range for several months, then sank below $34 in October 2019. A bad earnings report was to blame for that slide — analysts and investors felt they could not justify an aggressive valuation in an increasingly competitive environment.
Grubhub stock is now more than 70% below the all-time high achieved just over a year ago, and the new price looks much more reasonable based on its operating cash flows. A closer look at this stock will show if the price has adjusted properly, or if this is a growth stock with a cheap price tag.
Grubhub's top line has continued to expand every year, but those increases are not translating into profits. Its trailing nine-month revenues were up 35% year-over-year as of the most recent quarterly report, slightly below the three-year average growth rate. To achieve this growth, the company has continued to experience higher expenses across every category. Costs related to sales, marketing, and operations are making the most substantial difference.
Source Fool.com
