« Marketing expense expected to ramp in 2017, which can weigh on earnings, especially if gross food sales comes in weaker than anticipated.
Estimates vs. Consensus: Broadly in-line with consensus in 1Q’17 We expect 1Q revenue/EPS at $153mn/S0.25 vs. the Street at $153mn/$0.24 driven by gross food sales growth and an improving take rate.
Table 16: GrubHub Estimate Summary
1017 2017 2017 2018 Revenue BofAML est. $153 $159 $650 $815 Growth Y/Y% 37% 33% 32% 25% Street $153 $158 $645 $782 BofAML vs. Street Below Above Above Above EBITDA BofAML est. $41 46 $184 $247 Street $40 46 $181 $225 BofAML vs. Street Above Below Above Above EPS BofAML est. $0.25 $0.29 $1.13 $1.55 Street $0.24 $0.28 $1.10 $1.37 BofAML vs. Street Above Above Above Above
Source: BofA Merrill Lynch Global Research estimates, Bloomberg, as of 4/4/2017
Our PO is $49, based on 32x our 2018E P/E (vs. high growth internet at 31x). We believe GRUB warrants a premium to eCommerce peers due to the attractive margins of the core business and, relative to the overall small-cap sector, GRUB has more attractive margins and growth potential.
Bankof America
Merrill Lynch Internet/e-Commerce | 06 April2017 25
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