Shares in Just Eat (LSE: JE) soared by 7% on Thursday morning, in response to an impressive set of Q3 results.
While online food delivery is still in its infancy and at a stage where theres still room for new competitors, I reckon Just Eats early-mover status puts it in a commanding position in the business. Its also built up a well-known brand that people tend to think of first when ordering a takeaway.
Revenue is growing very strongly, with a 41% gain for the quarter to 195.3m (43% at constant currency). And for the nine months, we saw a 44% increase to 553.7m (45%at constant currency).
In the UK, Just Eat enjoyed its first ever weekend with more than a million orders in September, and that helped counter a bit of a slowdown caused by the scorching weather of the previous two months.
Its Canadian business,SkipTheDishes, saw revenue grow in triple-digits.
Full-year revenue is expected to come in towards the top end of the740 to 770m range, with underlying EBITDA towards thelower end of the 165 to 185m range.
One thing that does concern me a little is the share price chart, which shows characteristics of a typical growth bubble and they usually turn downwards pretty quickly.
Theres a forecast 2019 P/E multiple of a bit under 27, which is almost twice the long-term FTSE 100 average, and that might look a bit toppy.
But I think Just Eats growth potential means it could well be decent value and there could be a fair bit more to come.
Shares in the direct marketing firm have more than trebled in value over the past five years, outstripping Just Eats, so is this possibly a growth bubble thats set to burst? Again, I think not.
Thursdays trading update speaks of the 4Imprints strategic goal of $1bn in revenue by 2022, and reckons that the second half has so far lived up to its promise with overall demand consistent with the growth percentages experienced in the first half.
Guidance has been upgraded, with full-year revenue and underlying operating profit both now expected to be towards the upper end of current market forecasts.
That suggests the consensus for a 24% improvement in EPS for the year could be short of the mark. On the current share price it gives us a forecast P/E of 22, which is certainly nothing like the big valuations weve seen for some over-hyped growth shares.
Still good value?
Current 2019 predictions would drop the P/E to 19, and I really dont see that as too high for a company with 4Imprints growth potential.
The dividend looks set to continue growing at a pace well above inflation too and is expected to be twice covered by earnings. Forecast yields stand at 2.5% and 2.9% for this year and next, and I rate that as impressive at this stage.
Investors often scratch their heads over whether to go for earnings growth or dividends, but4Imprint looks set to deliver both.