In this edition of Battle Of The Stocks, we look at two stocks in the online food delivery and reservation business, Yelp [YELP] and GrubHub [GRUB]. While Yelp has well over a million restaurants on its website, GrubHub is an established online ordering service.
The two companies are an online ordering platform that connects diners with restaurants. Here, we look at which stock is a better buy at current levels.
Market Cap
Driven by the massive increase in share prices, the market cap of Yelp and GrubHub have grown significantly since the start of 2016.
Shares of Yelp are trading flat this year driven by a 15% decline in Oct. 2018. The stockĀ is however up 70% in the last 3 years and 50% in the last 18 months.
Comparatively, the GrubHub stock has gained over 250% since 2015 and 100% in the last 18 months. Despite a 36% decline in Oct., the stock is up 24% this year, easily beating returns of major indices.
This staggering climb in value resulted in billion-dollar valuations for the two companies. Yelpās market cap is currently $3.5B while GrubHubās market cap is higher at $8.1B.
However past returns are not an indicator of future price movements.
Revenue Growth
Revenue growth is a key indicator to gauge the financial position of any company. Any firm that can grow its revenue at a robust rate will be worth investing in.
Yelp reported sales of $844M last year and itās estimated to rise 14% to $963M this year. Analysts expect its revenue to grow 18% to a robust $1.14B in 2019.
GrubHub, on the other hand, reported sales of $680M last year and analysts expect its revenue to grow 34% to $1.4B.
WINNER: GrubHub
Profitability
The profit margins of these online ordering portals have expanded, driven by a rise in revenue and operating efficiencies. While Yelpās operating margin is estimated at 2.8% this year, itās expected to be 5.4% next year.
GrubHub, however, sees the operating margin at an estimated 18.7% for the current fiscal, while it’s expected to be 18.5% next year
WINNER: GrubHub
Earnings Growth
While the two companies are looking to improve profit margins, analysts and investors are concerned over the earnings growth potential.
Analysts expect Yelpās earnings per share (EPS) to grow 21% over the next 5 years. Comparatively, analysts expect GrubHubās earnings to rise 27% over the same period.
WINNER: GrubHub
Analyst Recommendation
We have looked at key financial metrics for the two stocks. Let’s see what Wall Street analysts expect from the companies. Analysts have a 12-month average target price of $51.22 for Yelp, indicating an upside potential of 23%.
Comparatively, analysts expect GrubHubās share price to rise to $296.94, providing an upside potential of 41% over the next year.
WINNER: GrubHub
It looks like GrubHub is a clear winner in this race. GrubHub is a better bet considering its profit margins and revenue and earnings growth rate. GrubHub also holds an edge due to a larger footprint and a solid reputation for customer service.
The food delivery segment is a high growth one with both companies looking to upstage the other and gain market share. We can see above that the domestic food delivery market is estimated to grow from $23.74B in 2016 to almost $40B in 2021.
I was looking around Google for an old article on tax strategies and this five-year old video of myself happened to pop up.
Iām interviewing a tax expert about how real estate investors avoid paying taxesin perpetuityāAND how everyday citizens can do the same thing.
(Real estateāour TEMPLE I and TEMPLE II projects includedāhas a number of tax benefits savvy investors have capitalized on for years, including Opportunity Zone breaks and 10-year tax abatements.)
Thereās the 1031 exchange, of course, which Iāve shared with you guys before.
Just to refresh your memory, the 1031 Exchange allows you to roll over gains from your last project into a new property TAX FREEāas long as said property is worth the same or more.
But thereās ANOTHER TAX LOOPHOLE that can take your portfolio to an entirely new level by splitting your capital gains into MULTIPLE properties.
PS: In our next update, Iām going to break down how real estate moguls get paid from their propertiesā¦tax free. š PPS: If you want to learn how to implement generational wealth strategies like this one, you can join our NYCE wealth academy (TRIBE U) here.
If thereās anything the pandemic taught us, itās that the paradigm of āofficeā and āworkspaceā has been shaken to its CORE.
Universities are teaching via Zoom, court dates are done virtually, FULLY REMOTE businesses are valued at $1B+, and legitimate Inc. 5000 startups are run fromā¦wherever. š²
This is my office for the dayā¦
I am actually running our business from the beach, typing this from here.
Itās 4:28 pm CET, which means itās 10:28 am EST and I am CRUSHING my to-do list.
(And the team will continue to crush it while Iām asleep. Thatās the š)
Having team members in all the main time zones gives us a 24-hour work cycle vs. 9-5/eight-hour on-the-clock performance.
This means we get 3x the productivity of a similar company. š„
Let me repeat thatā¦3x PRODUCTIVITY vs. our competitors.
Meanwhile our project management software grants us 24-hour TEAM-WIDE connectivity that tracks all tasks and lets us know if productivity dips even a little bit.
There is ALWAYS someone senior awake. It could be Martin in Barcelonaā¦Nat in New Yorkā¦Vineet & Arif in New Delhi.
Well, the first step is to have an actual side hustle youāre launching. Not just an idea, a validated business.
MAJOR KEY: Do NOT spend money until youāve made your FIRST DOLLAR! šššš
(You can catch a replay Business Launch masterclass here and see TRIBE member Nessa launched her business on the spot and got her first $45K client shortly after.)
One of the easiest ways to start is with Airbnbāyou can start that in 10 minutes. Literally. (Hereās a guide if you need it.)
Once you have your business, you build a virtual infrastructure (you really just need two softwares, which are FREE), manage the team accordingly and run the business from there.
Iām gonna put together a step-by-step video breakdown this weekend inside the new TRIBE U on the FIVE key things you need to do this for YOURSELF. šµ š
From what software to use, how to build a team, how to keep.
In the meantime, drop a comment if youāre ready to build some wealth and any questions if you want moreā¦
Letās get to work. š
PS: If you canāt be bothered with video and just wanna get to work, weāre hosting a TRIBE U workshopthat will help you get this process started on the spot. Itās $479 $49. š„
But what does it all really mean? How does it come together? In this week’s chart, our friends at CB Insights break down exactly how blockchain powers Bitcoin.
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