On the heels of stronger orders than they expected, DoorDash (NYSE: DASH) the stock rose nearly 12% in premarket trading last Friday, even though the quarterly loss was bigger than expected. Apparently, customers are still willing to spend more on food delivery as prices continue to rise.
This has resulted in a current share value of $54.55 with a new price target of $114.90. With the next reporting date not until the end of February, DoorDash has to climb to get there.
Success depends on knowing when – and how – to turn
Still, DoorDash has made some impressive choices over the past month, especially when it comes to expanding its vision. In October, the delivery company made some key hinges that were sure to improve its long-term outlook. First, they added the “Drinks with DoubleDash” program that allows users to add different types of alcohol to their order.
They also responded to the White House’s call to action and along with Walgreens in an effort to improve access to COVID-19 treatments, especially for the most vulnerable communities.
Likewise, she together with Tractor Supply to offer on-demand delivery from nearly 2,000 stores nationwide. While this may seem like a very niche minority market to tap into, let’s not forget that DoorDash only works if it can produce food. So improving their farming prospects could be a smart way for them too.
Loss of profit, but the stock is young
DASH has a current WPA of – $0.55 on revenue of $1.8 billion. At first glance, DoorDash’s earnings may not seem like much, but they didn’t go public until the end of 2020. This explains why their first year earnings are totally off: reported earnings of -$7.39 didn’t even come close to the estimated range low of -$0.13. While the range high and the consensus estimate were both positive – $0.45 and $0.20 – the huge miss isn’t entirely unexpected.
The annual figures for 2021 were more reasonable. While reported earnings missed the low range of -$1.35 by just 4 cents, this metric was much closer to expectations.
If we look closely at the last four quarters — roughly half of the stock’s life — the margins are much more reasonable. For example, at the end of 2021, reported earnings of -$0.45 fell short of the low range – also just 4 cents – but in the first quarter of 2022, revenues had recovered slightly: while -$0.48 fell short to the estimate, it did best the range low.
Unfortunately reported profit for Q2 fell below the range again, missing the low estimate of -$0.56 by 16 cents. Earnings bounced back slightly in the third quarter as the report closed the low of -$0.77.
Rising sales suggest more to come
While the earnings are a bit all over the place, DoorDash can really celebrate nicely consistent sales. For example, in both 2020 and 2021, sales met consensus estimates ($2.9 billion and $4.9 billion, respectively). This indicates that sales are not only consistent, but are improving dramatically.
Quarterly sales look even better than their annual counterpart. In the fourth quarter of 2021, revenue of $1.3 billion met estimates, which was the perfect median for the $1.2 to $1.4 billion range. However, sales for the next three quarters exceeded estimates by meeting the high end of the range. In addition, sales for these three consecutive quarters increased to 1.5, 1.6 and 1.7 billion.
The struggle is real…and wide
But despite DoorDash’s best efforts, they are not alone. Other technology/delivery stocks have the same hits and misses. For example, Uber Technologies, which deals with both food delivery and personal transportation, also has a mediocre BUY rating. In addition, Uber (NYSE: UBER) has relatively reasonable upside potential (77.20%), although it is not as impressive as DASH’s 110.72% upside potential.
At the same time, while both stocks are in the red so far, Uber’s YTD is twice that of DoorDash (-34.61% vs. -63.63%). Fortunately, Uber’s current EPS is also nearly double DoorDash’s, but in the opposite direction: DASH’s EPS is just $2.42 compared to UBER’s $4.54 EPS. They also have a similar one Price-sales ratio (P/S), at 4.31 and 3.14 respectively, which is not bad as both stocks show negative returns. Indeed, both DASH and UBER show negative values in P/E ratio, net margin, Return-on-Equity (RoE) and Return-on-Assets (RoA), although the values of UBER are 2 to 6 times larger.
Lyft is also considered part of this industry and their values are not too different. Similarly bearish, their current price is near the stock’s 52-week low, nearly -75% lower than in the year so far. Still, their upside down of +170.80% far outperforms the other two and the P/E ratio of -4.18, while still negative, is also the best of the three. While LYFT’s margin, RoE, and RoA are also all negative, the values are much closer to DoorDash than Uber.
That said, the moderate Buy rating for DASH is definitely worth considering, especially when compared to a somewhat balanced field of peers.