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GrubHub (GRUB) to Report Q1 Earnings: What's in the Cards?

Aniruddha Ganguly

GrubHub GRUB is set to report first-quarter 2019 results on Apr 25.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 11%.

In the last reported quarter, GrubHub’s adjusted earnings of 19 cents per share plunged 48.6% on a year-over-year basis. The decline can be attributed to higher investments in marketing and advertisements that fully offset the strong top-line growth.

For first-quarter 2019, GrubHub forecasts revenues between $310 million and $330 million. The Zacks Consensus Estimate for revenues is $322.8 million, which indicates growth of almost 38.8% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings is pegged at 25 cents, which has increased a penny over the past 30 days.

Grubhub Inc. Price and EPS Surprise

Grubhub Inc. Price and EPS Surprise | Grubhub Inc. Quote


Let’s see how things are shaping up prior to this announcement.

Key Factors to Consider

Grubhub’s margins are likely to be under pressure due to higher spending on marketing. Incremental expenses related to expansion into new delivery market is a headwind.

Buyouts of LevelUp, Yelp’s YELP Eat24, OrderUp and Boston-based Foodler are helping the company acquire new diners. However, higher spending on delivery and advertisement is expected to hurt profitability.

Nevertheless, the rapidly growing active diner base, driven by acquisitions and partnerships with the likes of Taco Bell and KFC, is expected to benefit the company’s top line in the to-be-reported quarter.

Moreover, growing adoption of the Grubhub delivery service is a key catalyst despite significant competition from Uber Eats and DoorDash.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

GrubHub has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are couple of companies, which, per our model, have the right combination of elements to post earnings beat this quarter:

Gogo GOGO has an Earnings ESP of +7.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square SQ has an Earnings ESP of +5.50% and a Zacks Rank #2.

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