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Why GrubHub Inc Shares Temporarily Jumped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of GrubHub Inc (NYSE: GRUB  ) rose by as much as 11% Friday morning, then settled to trade up roughly 2% by the afternoon after the online food-ordering company released solid first-quarter results.

So what: Quarterly revenue rose 49% year over year, to $58.6 million, which translated to net income of $4.4 million, or $0.06 per diluted share. Analysts, on average, were expecting earnings of just $0.03 per share on sales of $53.42 million. Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization came in nearly triple, to $16.4 million.

In addition, Himax also expects second-quarter revenue in the range of $53 million to $55 million, with adjusted EBITDA of $13 million to $15 million. Once again, Wall Street wasn't as optimistic going into the report, with estimates calling for current quarter sales of $52.61 million.

Now what: GrubHub CEO Matt Maloney added, "We are pleased with the scale we have achieved, with $1.4 billion in gross food sales processed through our platforms in the last 12 months.  And, as the clear leader in this large market, we are even more excited about the sizable opportunity in front of us."

Even so, GrubHub stock isn't exactly cheap trading around 18 times last year's sales, and 85 times next year's estimated earnings. As a result, while I certainly understand the initial pop, I can't blame the market for taking some profits off the table later in the day.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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9/4/2015 4:01 PM
GRUB $26.45 Down -0.46 -1.71%
Grubhub CAPS Rating: **