GrubHub Partnership With Yum Brand Delivers Soaring Shares


GrubHub (NYSE:GRUB) stock soars more than 27% to a new all-time high of $94 on Thursday trade. GrubHub is among those small-cap companies that have significantly expanded their market capitalization and share price. GrubHub stock soared almost 83% in the last year alone.

The latest rally was supported by higher than expected results for the final quarter of last year.

Moreover, investors admired the partnership with Yum Brands (NYSE:YUM). The partnership is aimed at strengthening Yum Brand’s sales potential in the U.S. through online ordering for pickup and delivery.

Additionally, Yum Brands has also bought $200 million of GrubHub shares. Yum Brands seeks to expand GrubHub’s liquidity and operational potential in the U.S. to drive more orders to Yum restaurants.

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Yum CEO said: “We’re pleased to secure this partnership with GrubHub to drive incremental, profitable growth for our U.S. franchisees over the long term. Our partnership and strategic investment in Grubhub demonstrate our laser-like focus on two of our growth drivers.”

Aside from new partnership, GrubHub stunned investors with its robust financial numbers. It has topped revenue and earnings estimates by a wide margin of $3.34 million and $0.06 per share.

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The company generated year over year revenue growth of 49% to $205.1 million in the fourth quarter. Its gross food sales surged by 39% year-over-year to $1.1 billion, an extension of almost $818 million from the past year period.

“Over the past two years we have taken incredible strides in expanding the breadth and depth of our restaurant network, growing the number of local restaurants we work with from 40,000 to over 80,000 today,” said GrubHub CEO, Matt Maloney.

The sharp sales growth has brought its fourth-quarter earnings to a new record level $0.60 per diluted share, substantially higher from $0.16 per diluted share in the previous year quarter.

GrubHub management looks to expand the momentum into Fiscal 2018. The company expects to generate revenue in the range of $960 million in FY2018, compared to $683 million in the last year. Overall, combined with execution of organic diner acquisition and merger integrations, its potential to scale delivery capabilities competently sets its footprints for strong growth in FY2018.

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