Just Eat shares drop despite stellar full year performance

As Just Eat updates the market Helal Miah, Investment Research Analyst at The Share Centre, explains what it means for investors.

Article updated: 7 March 2018 10:00am Author: Helal Miah

Revenues are up 45% and active customers rise to 21.5 million

As the market had expected, today Just Eat reported an excellent set of full year results, even marginally beating the consensus views. It stated revenues of £546m, up 45% on a reported basis and up an impressive 30% on an organic basis. Moreover, the online food order and delivery provider has seen the number of active customers rise significantly to 21.5 million and it should be appreciated that it has partnered up with 82,000 restaurants in delivering over £3bn of takeaway food. Underlying operating profits also grew to £163.5m, up 42%.

Shares down over 10% as market reacts negatively to plans to put money into future growth

Despite these stellar numbers, investors don’t seem too happy, sending the shares down over 10% in early morning trading. Clearly the market isn’t overwhelmed with the fact that management will plough even more resources and investment into future growth. Already this year the company has posted a statutory loss of £76m due to expansion programmes as well as acquisitions and further investment will only delay the point at which it goes back into the black.

We recommend Just Eat as a ‘hold’ for medium risk investors who seek capital growth

We do believe this is a high growth company with more progress to come, especially in international markets, however, our view has been that the shares were too expensive to justify these growth rates and, even with today’s falls, we still believe that it should be better priced.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.