Why is Just Eat Takeaway so Cheap?

VIDEO: Our new video series looks at stocks that look cheap or expensive - and why. This week it's the turn of 5-star rated food delivery service Just Eat Takeaway

James Gard 21 June, 2021 | 10:43AM
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James Gard: Each week we look at one stock that is cheap or expensive – and why. Today let’s look at food delivery service Just Eat Takeaway, one of only a handful of stocks have a 5-star rating from Morningstar.

Online food delivery boomed during lockdown in 2020 and Just Eat’s shares soared to record highs. So why are they still trading more than 50% below their fair value? Some people think food delivery will fade once economies re-open and people spend less time at home. Deliveroo’s IPO flop has hurt investor sentiment towards the sector, in the short term at least.

But Just Eat has one of the most recognisable brands in the industry and has used its first mover advantage to build a dominant share in its key markets. In the UK for example, it has 16 million active customers and in the US, it has hust taken over rival GrubHub.

Our analysts think online food delivery can remain popular even as lockdown lifts, and Just Eat Takeaway is our top pick in this fast-growing industry. The company has a narrow moat and fair value of £132 per share, against a current value of around £63.

For Morningstar, I’m James Gard.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk