Morningstar

Just Eat Takeaway’s Earnings Show Gains in Europe, U.K.

Shares of the food delivery company are now trading in 5-star territory.

Just Eat Takeaway reported half-year 2022 results with total orders down 7%, flat gross transaction value, and revenue up 1%. North America was the main detractor with revenue down 5%, which was more than offset by European operations (Northern Europe up 6%, United Kingdom and Ireland up 10%, Southern Europe and Australia/New Zealand up 6%).

Adjusted EBITDA improved at the group level to minus EUR 134 million from minus EUR 189 million a year ago. More importantly, on guidance, management reiterated its outlook for fiscal 2022 (GTV growing by midsingle digits and adjusted EBITDA margin in the range of minus 0.5% to minus 0.7% of GTV versus 0.5% and minus 0.7% in our model respectively).

Management also expects to reach positive adjusted EBITDA in 2023 at the group level (versus slightly positive in our model) and confirms long-term targets (in excess of EUR 30 billion of GTV added over the next five years and long-term group adjusted EBITDA margin in excess of 5% of GTV versus EUR 19 billion by 2026 and 4.3% by 2030 in our model). We maintain our EUR 81 fair value estimate and narrow moat rating for Just Eat. Guidance implies about 10% GTV growth and minus 0.3% of GTV adjusted EBITDA margin in the second half, which although higher than our estimates we view as achievable.

Regardless of current-year beats or misses, the potential divestment of iFood or Grubhub, market exits from unprofitable regions (France and Australia), and a return to profitable growth for Grubhub (aided by the recent Amazon deal) are the main catalysts in the short to medium term, in our opinion. In the long term, we expect market rationalization to continue (no new entrants and lower competitive intensity among incumbents) along with insurmountable barriers to entry (given incumbents have now achieved large scale in many cases) and the secular trend of online food ordering to be the main drivers of value creation, underpinning our constructive view of the sector. Shares trade deep in 5-star territory.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Ioannis Pontikis, CFA

Director of Equity Research in Europe
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Ioannis Pontikis, CFA, is a Director of Equity Research in Europe for Morningstar*. He covers European grocers and global food and beverage companies like Tesco, Unilever, Nestle, and Danone, and manages a team of eight analysts across the Financials and Consumer sectors. He also leads Morningstar’s Equity Research Valuation Committee, advancing the firm's valuation methodology through projects such as developing new methodologies, refining our valuation model, and enhancing the efficacy of our ratings.

Before joining Morningstar in 2017, Pontikis spent six years on the buy-side, co-managing a $100M long/short equity fund and leading teams in applying machine learning to stock and equity factor selection models. He developed the fund's valuation and risk assessment framework, achieving strong risk-adjusted performance. Prior to this, Pontikis worked at Nestle S.A. in Athens, focusing on financial reporting, budgeting, and auditing proposals to improve processes.

Pontikis research has appeared in numerous media outlets including Bloomberg, CNBC, Reuters, Guardian, Frankfurter Allgemeine Zeitung among others.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus’s and a master’s degree in accounting and finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation and studying towards an advanced post-masters degree in portfolio and risk management.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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