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Just Eat NV TKWY

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Morningstar’s Analysis

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Just Eat's Capital Markets Presentation Confirms Our Long-Term Expectations; Margin of Safety Strong

Analyst Note

| Ioannis Pontikis, CFA |

Ahead of its capital markets day event on Oct. 21, Just Eat Takeaway published a presentation and press release laying out key areas of focus for its upcoming event and reiterating fiscal 2021 guidance (order growth excluding Grubhub above 45%, gross transaction value, or GTV, in the range of EUR 28 billion-30 billion and adjusted EBITDA margin of minus 1% to minus 1.5% of GTV) as well as fresh long-term targets including guidance for 2022. The group now expects 2022 adjusted EBITDA margin to be minus 0.6% to minus 0.8% of GTV (with 2021 being the peak year of loss as previously guided), midteens percentage GTV growth in 2022 (in line with our estimates), over EUR 30 billion of GTV added in the next five years and long-term group adjusted EBITDA margin of over 5% of GTV (versus 5.3% by 2030 in our model). Although we don't have consensus data for long-term forecasts, we sense this long-term guidance (top line and bottom line) is well ahead of market expectations. With regard to the top-line five-year GTV growth guidance, we think consensus (including ourselves) has not factored in growth coming from the convenience grocery market, which the company highlights in the presentation as a focus area ("expanding our market through convenience grocery") and had previously dismissed it as not strategic. On long-term profitability targets (over 5% of GTV versus 5.3% by 2030 in our model), we view guidance to be particularly bullish, as this now includes the contribution from convenience grocery sales (which is generally perceived to be margin-dilutive). We think the main message of the Oct. 21 presentation will be laying out the strategy that will enable Just Eat Takeaway to achieve profitable and sustainable growth across regions/markets/verticals based on the firm's unique position (hybrid model and scale). We maintain our fair value estimate for Just Eat Takeaway. Shares trade deep in 5-star territory, presenting a compelling investment case for long-term investors.

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Company Profile

Business Description

Just Eat Takeaway operates an online marketplace that connects restaurants with users in Europe and North America. The company operates mainly as an order-only marketplace, although it also offers last-mile delivery services. The company is the result of the merger of Just Eat Plc and NV in early 2020. The company had close to 60 million active users on its platform generating revenue of about EUR 2 billion and a gross merchandise value of EUR 13 billion. Excluding the U.S. after its recent acquisition of Grubhub, the company’s largest geographical presence by revenue is in the U.K., followed by Germany, Canada, and the Netherlands.

Oosterdoksstraat 80
Amsterdam, 1011 DK, Netherlands
T +31 614315479
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type