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GrubHub (GRUB) Withdraws 2020 Guidance on Coronavirus Woes
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Grubhub shares fell almost 12% following its withdrawal of 2020 guidance provided on Feb 5. The company cited the impact of the coronavirus spread on its business operations behind the withdrawal.
Notably, for 2020, Grubhub projected revenues between $1.40 billion and $1.50 billion. Adjusted EBITDA was anticipated to be at least $100 million compared with $186.2 million reported in 2019. Moreover, DAG growth on a year-over-year basis and order growth were expected to improve in 2020.
Markedly, the Zacks Consensus Estimate for 2020 revenues is pegged at $1.44 billion, indicating a 9.5% growth from the prior-year reported number. However, the consensus mark for earnings has moved 16.7% south to 5 cents per share, implying a 93.7% fall from the previous year’s reported figure.
The stock has been down 18.5% on a year-to-date basis, underperforming the industry’s 7.3% decline.
Grubhub now expects first-quarter 2020 revenues and adjusted EBITDA to be slightly above the midpoints of the guidance it issued on Feb 5.
The company’s earlier revenue estimate was between $350 million and $370 million, indicating a mid-point of $360 million. Adjusted EBITDA was anticipated to be $15-$25 million.
The Zacks Consensus Estimate for first-quarter revenues now stands at $350.9 million, suggesting 8.4% growth from the figure reported in the year-ago quarter.
Grubhub stated that overall growth was hurt by the coronavirus outbreak in New York, which was the most affected of the metros. Notably, the company’s corporate business, which accounted for mid-single digit percentage of its fourth-quarter orders, was hit hard as almost all of Grubhub’s corporate clients started working remotely.
Management now expects first-quarter Daily Average Grubs (DAGs) to be flat year over year.
However, order trends showed some improvements in April, with DAG growing 10% year over year so far in the month. The company is witnessing solid order rate in markets less affected by the coronavirus, while in New York, order trend is stabilizing.
Grubhub expects to reap profits (in terms of adjusted EBITDA) in second quarter but will reinvest most of it in supporting the company’s ecosystem, particularly restaurants partners.
While VMware cancelled its fiscal 2021 guidance due to the coronavirus impact on its business operations, Pinterest became the latest victim of the weakening advertising market due to the COVID-19 pandemic.
Further, Cognizant revoked its 2020 guidance provided on Feb 5, due to the negative impact of the coronavirus outbreak. Reduced client demand and delays in delivery on account of remote working in India and the Philippines are expected to affect Cognizant’s top line.
Although Grubhub’s full-year guidance withdrawal is disappointing its expanding partner base including the likes of McDonalds’, Yum Brands! and Shake Shack is a major driver.
Moreover, efforts to enhance the delivery network and strengthen alliance with new quality-focused restaurants are expected to expand the customer base of this Zacks Rank #3 (Hold) stock once the impact of coronavirus wanes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
GrubHub (GRUB) Withdraws 2020 Guidance on Coronavirus Woes
Grubhub shares fell almost 12% following its withdrawal of 2020 guidance provided on Feb 5. The company cited the impact of the coronavirus spread on its business operations behind the withdrawal.
Notably, for 2020, Grubhub projected revenues between $1.40 billion and $1.50 billion. Adjusted EBITDA was anticipated to be at least $100 million compared with $186.2 million reported in 2019. Moreover, DAG growth on a year-over-year basis and order growth were expected to improve in 2020.
Markedly, the Zacks Consensus Estimate for 2020 revenues is pegged at $1.44 billion, indicating a 9.5% growth from the prior-year reported number. However, the consensus mark for earnings has moved 16.7% south to 5 cents per share, implying a 93.7% fall from the previous year’s reported figure.
The stock has been down 18.5% on a year-to-date basis, underperforming the industry’s 7.3% decline.
Grubhub Inc. Price and Consensus
Grubhub Inc. price-consensus-chart | Grubhub Inc. Quote
Grubhub Raises Q1 View
Grubhub now expects first-quarter 2020 revenues and adjusted EBITDA to be slightly above the midpoints of the guidance it issued on Feb 5.
The company’s earlier revenue estimate was between $350 million and $370 million, indicating a mid-point of $360 million. Adjusted EBITDA was anticipated to be $15-$25 million.
The Zacks Consensus Estimate for first-quarter revenues now stands at $350.9 million, suggesting 8.4% growth from the figure reported in the year-ago quarter.
Grubhub stated that overall growth was hurt by the coronavirus outbreak in New York, which was the most affected of the metros. Notably, the company’s corporate business, which accounted for mid-single digit percentage of its fourth-quarter orders, was hit hard as almost all of Grubhub’s corporate clients started working remotely.
Management now expects first-quarter Daily Average Grubs (DAGs) to be flat year over year.
However, order trends showed some improvements in April, with DAG growing 10% year over year so far in the month. The company is witnessing solid order rate in markets less affected by the coronavirus, while in New York, order trend is stabilizing.
Grubhub expects to reap profits (in terms of adjusted EBITDA) in second quarter but will reinvest most of it in supporting the company’s ecosystem, particularly restaurants partners.
Grubhub Joins Tech Giants to Scrap Guidance
Grubhub joins a long list of tech bigwigs like Apple, Microsoft, Twitter, VMware , Cognizant (CTSH - Free Report) and Pinterest (PINS - Free Report) who either suspended their guidance or warned of lagging expectations due to the coronavirus pandemic. (Read More: Twitter Joins Tech Club to Ditch Q1 View on Coronavirus Woes)
While VMware cancelled its fiscal 2021 guidance due to the coronavirus impact on its business operations, Pinterest became the latest victim of the weakening advertising market due to the COVID-19 pandemic.
Further, Cognizant revoked its 2020 guidance provided on Feb 5, due to the negative impact of the coronavirus outbreak. Reduced client demand and delays in delivery on account of remote working in India and the Philippines are expected to affect Cognizant’s top line.
Although Grubhub’s full-year guidance withdrawal is disappointing its expanding partner base including the likes of McDonalds’, Yum Brands! and Shake Shack is a major driver.
Moreover, efforts to enhance the delivery network and strengthen alliance with new quality-focused restaurants are expected to expand the customer base of this Zacks Rank #3 (Hold) stock once the impact of coronavirus wanes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>