The Just Eat (LSE: JET) share price has seen some big moves in the past year. It has dropped by 29% in the last 12 months overall, but in the last month it has seen healthy 5% growth.
The rise in price followed its H1 FY21 report and the results were promising. So can Just Eat deliver a strong share price in the future?
Strong interim report
In its latest results, Just Eat reported a huge 51% increase in orders since H1 2020, and its revenue on a combined basis grew by 52% to €2.6bn in the first six months of 2021.
These are certainly impressive statistics, but I’m also appreciative of how Covid-19 boosted the takeaway industry. As families were unable to leave their homes to enjoy a night out and infection rates were rising, store-to-door food delivery became the safer alternative.
Now that Covid restrictions have been lifted, I’m convinced that this will negatively impact the growth of food delivery orders.
Uncertainty in the USA
Just Eat has operations running in the UK, Germany, Canada, the Netherlands and recently acquired Grubhub in the US. Grubhub received 134 million orders in the first half of 2021 which is a 27% rise from last year, with the addition of 30,000 partnered restaurants.
Despite these figures, JET’s first-half post-tax loss peaked at a total of €486m. Just Eat made losses in the UK and the American market with the easing or ending of lockdown restrictions. Its US losses are a huge concern for me as Grubhub accounts for almost 25% of total orders for Just Eat. If losses continue in this market, it could start to seriously hinder the company and the Just Eat share price.
JET plans for continued growth
It could be that Grubhub is still finding its place in the market and this would explain the losses. The company expects 45% year-on-year order growth for Grubhub and I think this prediction is justified on the basis of previous results. It also believes that the gross transaction value for its US venture will be in the range of €28bn-€30bn by the end of FY21.
It also said it is fastest-growing business in the industry at almost double the pace of its competitors. This isn’t just in the US as it has reported growth in all of the countries it has interests in. In this regard, I think that Just Eat’s growth rate could eventually start to improve its balance sheet.
Is it time to invest?
I like to look for long-term investments and because of this I tend to favour companies that are high performers. While financial performance indicators such as big losses and net debt are a concern for me, I think that over a decade or so, its growth could be impressive. With Just Eat developing at a pace that is faster than its competitors, I’m considering adding this share to my portfolio.
As for whether share price growth can continue into next month, I think the impressive growth performance on the back of the most recent financial report could propel investors to bolster the share price. I believe an investment right now could see good returns for me moving into September.
