What is GrubHub Predictability Rank?
Not Rated
Warren Buffett said many times that the companies he likes are:
1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.
It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.
GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.
GrubHub Predictability Rank Calculation
In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.
Our study may be subject to these biases and assumptions:
Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.
The correlation between business predictability and investment returns of a company is showed below.
Correlation Between Business Predictability and Investment Returns
| Predictables | Non-Predictable | All stocks |
|---|
| Total Number of stocks | 570 | 1833 | 2403 |
| Total Lost Money | 61 | 830 | 891 |
| Total Lost More Than 50% | 18 | 412 | 430 |
| Total Lost More Than 90% | 4 | 86 | 90 |
| Average Gain | 260.6% | 100.0% | 138.1% |
| Median Gain | 150.0% | 13.0% | 39.0% |
| Maximum Gain | 2852.0% | 11483.0% | 11483.0% |
| Maximum Loss | -100.0% | -100.0% | -100.0% |
| Annualized Average Gain | 12.7% | 6.7% | 8.4% |
| Annualized Median Gain | 8.9% | 1.1% | 3.1% |
For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.
| Predictability Rank | 5-Star | 4.5-Star | 4-Star | 3.5-Star | 3-Star | 2.5-Star | 2-Star | 1-Star (non-predictable) | Average among all |
|---|
| % Out of All 2403 Stocks |
3.3% |
2.9% |
3.7% |
3.3% |
3.3% |
3.7% |
3.3% |
76.3% |
100% |
| % that are in Loss (10y) |
3% |
10% |
8% |
9% |
11% |
18% |
16% |
45% |
37% |
| Average Gain (10y) |
364.6% |
330.9% |
278.0% |
235.1% |
243.5% |
227.8% |
154.8% |
100.0% |
138.1% |
| Median Gain (10y) |
238.5% |
193.5% |
171.0% |
159.0% |
132.5% |
113.5% |
87.0% |
13.0% |
39.0% |
| Maximum Gainer |
2228.0% |
2547.0% |
2452.0% |
2852.0% |
2432.0% |
1892.0% |
1807.0% |
11483.0% |
11483.0% |
| Maximum Loser |
-82.0% |
-53.0% |
-67.0% |
-100.0% |
-83.0% |
-100.0% |
-78.0% |
-100.0% |
-100.0% |
| Annualized Average Gain |
15.4% |
14.6% |
13.2% |
12.0% |
12.2% |
11.7% |
9.1% |
6.7% |
8.4% |
| Annualized Median Gain |
12.1% |
10.6% |
9.8% |
9.3% |
8.2% |
7.3% |
6.0% |
1.1% |
3.1% |
For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
GrubHub (GrubHub) Business Description
Traded in Other Exchanges
N/A
Address
111 W. Washington Street, Suite 2100, Chicago, IL, USA, 60602
Founded in 2004, Grubhub provides an online takeout food platform for diners and restaurants. The firm generates revenue by charging restaurants a commission based on each order amount. It also charges consumers a delivery fee for orders where the firm handles the delivery. Grubhub has over 50,000 restaurant partners.
Executives
| Adam Dewitt |
officer: President, CFO and Treasurer |
39 SOUTH LASALLE STREET, SUITE 220, CHICAGO IL 60603 |
| Margo Drucker |
officer: Chief Legal Officer, Secretary |
1065 AVENUE OF THE AMERICAS NEW YORK NY 10018 |
| Brandt Walter Kucharski |
officer: Prin. Acct. Officer/Controller |
111 W WASHINGTON STREET, SUITE 2100, CHICAGO IL 60602 |
| Samuel Pike Hall |
officer: Chief Product Officer |
C/O GRUBHUB INC., 111 W. WASHINGTON STREET, CHICAGO IL 60602 |
| Matthew M. Maloney |
director, officer: CEO |
200 EAST RANDOLPH STREET, SUITE 2435, CHICAGO IL 60601 |
| Brian P Mcandrews |
director |
C/O PANDORA MEDIA, INC, 2101 WEBSTER STREET, #1650, OAKLAND CA 94612 |
| Linda Johnson Rice |
director |
|
| David C Habiger |
director |
C/O XPERI HOLDING CORPORATION, 3025 ORCHARD PARKWAY, SAN JOSE CA 95134 |
| David Fisher |
director |
39 SOUTH LASALLE STREET, SUITE 220, CHICAGO IL 60605 |
| Keith Richman |
director |
C/O GRUBHUB INC. 111 W. WASHINGTON STREET, SUITE 2100 CHICAGO IL 60602 |
| Girish Lakshman |
director |
111 W. WASHINGTON STREET SUITE 2100 CHICAGO IL 60602 |
| Lloyd D Frink |
director |
C/O ZILLOW GROUP, INC., 1301 SECOND AVENUE, FLOOR 31, SEATTLE WA 98101 |
| Katrina Lake |
director |
111 W. WASHINGTON STREET, SUITE 2100, CHICAGO IL 60602 |
| Maria Belousova |
officer: Chief Technology Officer |
C/O GRUBHUB INC., 5 BRYANT PARK, 15TH FL NEW YORK NY 10018 |
| Stanley Chia |
officer: Chief Operating Officer |
111 W. WASHINGTON STREET, SUITE 2100, CHICAGO IL 60602 |
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