Q3 results show that Just Eat plc could still make you brilliantly rich

Food delivery service Just Eat(LSE: JE) has been one of the tastiest UK stocks of recent years, but the question now is whether it can continue to maintain its delicious momentum.

Eat that!

Its share price has lured investors after rising 145% over three years and 40% over the past 12 months. It is up another 4% today, following publication of Q3 performance figures to 30 September. The results show Just Eat delivering a strong performance with increased full-year revenue guidance, which is certainly to the market's liking.

Q3 group revenue rose 47% to £138.6m, while year-to-date revenues rose 45% to £385.2m. This was driven by strong order growth and the inclusion of SkipTheDishes, the Canadian online food delivery service it bought last December for an initial £66.1m.

Very dishy

Total orders rose 29% to 43.1m in Q3, of which 26.2m were UK orders, up 22% against a comparative period that was impacted by unseasonal weather conditions. International orders rose 43% to 16.9m, driven by triple-digit pro-forma order growth from SkipTheDishes. Management has a thirst for further acquisitions and has received provisional clearance for its proposed acquisition of Hungryhouse, from the Competition and Markets Authority.

Just Eat, which has now been a listed company for three years, also raised its previous revenue guidance for full-year 2017 of £500m-£515m to between £515m-£530m, which again it puts down to SkipTheDishes, while retaining its underlying EBITDA of between £157m-£163m.

Canada fly

CEO Peter Plumb said of all this: "The Just Eat team has once again delivered another period of strong growth. As I get to know the company, it is great to see the UK business in good health and positive momentum across our international markets, particularly in Canada where SkipTheDishes' delivery expertise and relentless focus on customer service are driving excellent results."

So can Just Eat can continue to grow at this pace? In this respect, I am particularly encouraged by the FTSE 250 company's global ambitions, and its quick success in Canada. If it can continue to break new markets, future growth should be baked in.

Nice bite

However, we shouldn't underestimate how rapidly it has risen: Just Eat now has a market cap of £5.23bn. It is expensive by conventional metrics currently trading at 112 times earnings, although the forecast valuation is a less stomach churning 44 times earnings. Earnings per share (EPS) growth is set to slow, inevitably, after hitting 200% in 2014, 58% in 2015 and 85% in 2016. However, City forecasters reckon it can still manage 36% EPS growth both this year and next, which looks healthy enough to me.

Both revenues and profits are also expected to grow at quite a lick. There is no dividend but I would prefer to see spare cash ploughed back into more acquisitions anyway. There are threats. For example, Facebook has just started taking food orders and the market could start to look a little crowded with UberEats and Deliveroo also engaged in the food fight.

However, Just Eat continues to drive the trend for online food ordering, which is migrating to the net like pretty much everything else, and remains a buy even if momentum inevitably slows.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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