What is GRUB's Intrinsic value?

GrubHub Inc (GRUB) Intrinsic Value Analysis

Executive Summary

As of June 17, 2025, GrubHub Inc's estimated intrinsic value ranges from $6.08 to $6.08 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $6.08 -9.5%

Is GrubHub Inc (GRUB) undervalued or overvalued?

With the current market price at $6.72, the stock appears to be fairly valued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate GrubHub Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 1.4% 1.9%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.95 0.99
Cost of equity 5.9% 8.1%
Cost of debt 5.0% 5.0%
Tax rate 21.1% 28.6%
Debt/Equity ratio 0.09 0.09
After-tax WACC 5.8% 7.7%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $178M
Discount Rate (WACC) 7.7% - 5.8%
Enterprise Value $2,294M - $3,081M
Net Debt $146M
Equity Value $2,149M - $2,936M
Outstanding Shares 325M
Fair Value $7 - $9
Selected Fair Value $6.08

Key Financial Metrics

Metric Value
Market Capitalization $2808M
Enterprise Value $2953M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 11.70
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.09

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $0.61
Weighted Average 100% $6.08

Investment Conclusion

Based on our comprehensive valuation analysis, GrubHub Inc's weighted average intrinsic value is $6.08, which is approximately 9.5% below the current market price of $6.72.

Key investment considerations:

  • Strong projected earnings growth (-4% to -4% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.09)

Given these factors, we believe GrubHub Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.