Back to top

Image: Bigstock

GrubHub (GRUB) to Report Q2 Earnings: What to Expect?

Read MoreHide Full Article

GrubHub Inc. is set to report second-quarter 2016 results on Jul 28. Last quarter, the company posted in line earnings. The company has posted an average positive earnings surprise of 25.00% over the past four quarters.

Let’s see how things are shaping up for this quarter.

Factors to Consider

GrubHub’s business model is a big positive as it is based on providing an online and mobile platform for restaurant pick-up and delivery orders in the U.S. through its strategic partnerships with restaurants. Its strong presence offers a competitive advantage.

In May, the company launched a new technology platform, GrubCentral, which replaced its OrderHub. The new platform has been designed to not only allow restaurants to handle online orders but also provide them with integrated delivery features (like real-time information about the driver location).

More importantly, the platform being operational through any device greatly eases the process for restaurant owners. We believe that this new platform should boost the company’s top line to some extent in the to-be-reported quarter. Last month, the company also included Apple’s (AAPL - Free Report) mobile payment service Apple Pay in order to give a wider yet secure and easy payment option to its users.

While GrubHub does have an advantage in the space, its business model requires huge volumes to be effective since it charges a lower-than-average rate. This will inevitably put pressure on the company if it fails to successfully implement its pricing strategy and secure more volumes. In addition, competition in the space remains rife with players like Postmates, DoorDash, Caviar, Yelp Inc.’s (YELP - Free Report) Eat24, Amazon and Uber.

GRUBHUB INC Price and EPS Surprise

GRUBHUB INC Price and EPS Surprise | GRUBHUB INC Quote

Earnings Whispers

Our proven model does not conclusively show that GrubHub will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: GrubHub has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 14 cents.

Zacks Rank: GrubHub currently has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is a stock worth considering that, as per our model, has the right combination of elements to post an earnings beat this quarter:

General Dynamics Corp. (GD - Free Report) has an earnings ESP of +2.17% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


General Dynamics Corporation (GD) - free report >>

Apple Inc. (AAPL) - free report >>

Yelp Inc. (YELP) - free report >>

Published in