GrubHub (GRUB) To Report Q1 Earnings: What's In The Cards?

GrubHub Inc. (NYSE:GRUB) is set to report first-quarter 2017 results on Apr 27. Last quarter, the company posted a negative earnings surprise of 5%. The company has posted an average positive earnings surprise of 14.35% over the past four quarters.

Let’s see how things are shaping up for this quarter.

Factors to Consider

GrubHub provides an online and mobile platform for restaurant pick-up and delivery orders in the U.S. through its strategic partnerships with restaurants. Its strong presence offers a competitive advantage.

Of late, the company has been gaining a lot of traction in the business driven by its branding efforts, and ongoing improvements in products and delivery network.

Recently, GrubHub introduced “Delivery X: Delivery Without Limits” to enable quick and timely delivery of food to dense urban metro areas.

Furthermore, GrubHub recently integrated its ordering system with Amazon’s Alexa, enabling users of Amazon (NASDAQ:AMZN) Echo, Echo Dot and Amazon Tap to order their food through voice command.

We note that GrubHub outperformed the Zacks Internet - Delivery Services industry in the last one year. While the stock returned 29.1%, the industry gained 18.4%.

While GrubHub does have an advantage in the space, its business model requires huge volumes to be effective since it charges a lower-than-average rate. This inevitably puts pressure on the company if it fails to successfully implement its pricing strategy and secure more volumes. In addition, competition in the space is rife with players like Yelp Inc.’s Eat24, Amazon and Uber and more.

GrubHub Inc. Price and EPS Surprise

GrubHub Inc. Price and EPS Surprise | GrubHub Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that GrubHub will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: GrubHub has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 19 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: GrubHub currently has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Square, Inc. (NYSE:SQ) with an Earnings ESP of +12.50% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Identiv, Inc. (NASDAQ:INVE) with an Earnings ESP of +6.67% and a Zacks Rank #2.

DragonWave Inc (TO:DRWI) with an Earnings ESP of +8.82% and a Zacks Rank #2.

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