The on-demand food delivery service providers proved to be saviors when the world came to a near standstill due to the COVID-19 outbreak in 2020. People spent much more time at home then, owing to pandemic-related restrictions. These restrictions meant that food delivery companies had to work harder to fulfill increasing food delivery orders. According to a Zippia report, U.S. food delivery revenue increased 17% to $26.50 billion from $22 billion between 2019 – 2020.

Food delivery stocks were in the limelight due to the immense growth in orders. However, as pandemic-related restrictions have eased and vaccinations are working, the demand for on-demand food delivery might slow.  After being locked down for an extended period, people are now increasingly dining out and spending time at restaurants.

Given this backdrop, we think it could be wise to avoid fundamentally weak food delivery stocks Uber Technologies, Inc. (UBER - Get Rating), DoorDash, Inc. (DASH - Get Rating), and Just Eat Takeaway.com N.V. (GRUB - Get Rating).

Uber Technologies, Inc. (UBER - Get Rating)

Famous ride-hailing service provider UBER, in San Francisco,  develops and operates proprietary technology applications. It connects consumers with independent ride services providers for ridesharing and other forms of transportation services, including delivery service providers for meal preparation, grocery, and other delivery services. In addition, it operates in the Mobility, Delivery, Freight, and Advanced Technologies Group and other technology programs.

On Nov. 26, 2021, UBER announced that it had halted its operations in Belgium after a Brussels court ruling extended the 2015 cease-and-desist order against an earlier service to drivers that hire cars and offer taxi services via the UBER app. The ban on private individuals offering taxi services, which also applies to professional drivers, is a significant blow for the company.

UBER’s net loss for its fiscal third quarter, ended Sept. 30, 2021, increased 122.5% year-over-year to $2.42 billion. The company’s current assets decreased 2% year-over-year to $9.68 billion. Also, its long-term debt was  $9.27 billion, compared to $7.56 billion in fiscal 2020.

Analysts expect UBER’s EPS to remain negative in fiscal 2021 and 2022. Over the past nine months, the stock has declined 22.9 % in price  to close yesterday’s trading session at $44.42.

UBER’s bleak prospects are reflected in its POWR Ratings. It has an overall D rating, which translates to a Sell. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has a D grade for Value, Stability, and Sentiment. It is ranked #53 of 78 stocks in the D-rated Technology – Services industry. Click here to see the other ratings of UBER for Growth, Momentum, and Quality.

DoorDash, Inc. (DASH - Get Rating)

DASH operates a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. The San Francisco company operates DoorDash Marketplace, which provides an array of services that enable merchants to solve mission-critical challenges, such as customer acquisition, delivery, and others. It also offers DoorDash Drive and DoorDash Storefront.

On Nov. 22, 2021, San Francisco city attorney David Chiu said that DASH would pay a more than $5 million fine due to alleged labor law violations. The city alleged that the company violated San Francisco’s health care benefit and paid sick leave laws by misclassifying workers as independent contractors instead of employees.

For its fiscal third quarter, ended Sept. 30, 2021, DASH’s sales and marketing expenses increased 53.8% year-over-year to $446 million. Its total costs and expenses increased 50.4% year-over-year to $1.37 billion. Also, its net loss increased 135% from the same period last year to $101 million.

DASH’s EPS for its fiscal 2021 and 2022 are expected to remain negative. It has failed to surpass the Street’s EPS estimates in each of the trailing four quarters. Over the past three months, the stock has declined  31.2% in price to close yesterday’s trading session at $135.91.

DASH’s POWR Ratings reflect these weak prospects. It has an overall D rating, which equates to a Sell. It has a D grade for Value, Stability, and Sentiment. Within  the D-rated Internet – Services industry, it is ranked #36  of 37 stocks. To see the additional ratings of DASH for Growth, Momentum, and Quality, click here.

Just Eat Takeaway.com N.V. (GRUB - Get Rating)

Headquartered in Amsterdam, Netherlands, GRUB operates as an online food delivery marketplace that connects consumers and restaurants. The company transmits orders placed by customers and forwards them to restaurants that prepare and deliver the meals.

GRUB’s U.S. orders for the third quarter, ended Sept. 30, 2021, increased 3% year-over-year to 63.50 million. The company’s Gross Transaction Value (GTV) for the U.S. increased 2% year-over-year to €2.10 billion ($2.37 billion). Also, its delivery orders for the U.S. came in at 43.10 million, representing a 23% increase.

However, analysts expect GRUB’s EPS to remain negative in fiscal 2021. Over the past six months, the stock has declined 43.7% in price to close yesterday’s trading session at $10.36.

GRUB’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, which translates to a Strong Sell. Also, it has an F grade for Quality and a D grade for Growth and Value. It is ranked #70 out of 77 stocks in the Internet industry. Click here to see the additional ratings of GRUB for Momentum, Stability, and Sentiment.

UBER shares were trading at $44.74 per share on Wednesday morning, up $0.32 (+0.72%). Year-to-date, UBER has gained 6.70%, versus a 0.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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