Top UK Stocks: Just Eat shares hit by growth slowdown
Joshua Warner October 13, 2021 7:33 AM
Just Eat sees order growth slow, Barratt says demand remains high as prices rise, THG is bemused by the sharp fall in its share price, Darktrace delivers impressive growth, NatWest to provide £100 billion of green funding, and Marston’s sees sales surpass pre-pandemic levels.
Just Eat Takeaway orders grow 25%
Just Eat Takeaway.com said orders increased by 25% in the third quarter, marking a sharp slowdown from earlier this year.
The online food delivery firm said it took 266 million orders in the third quarter and the gross transaction value of those orders grew 23% to EUR6.8 billion.
The growth in orders has slowed from over 50% growth in the first half and was sharper than forecast, with analysts at ING Bank having expected a 35% rise in orders during the quarter.
Just Eat Takeaway shares were down 3.7% this morning.
The UK remained its fastest-growing market with orders up 51% year-on-year, with Just Eat UK now having taken over 1 billion orders since being launched, followed by 35% order growth in Germany.
The performance in the US, its second largest market, was less impressive with orders growing just 3% year-on-year. That follows on from the company buying GrubHub last year, with the firm stating it has started to implement an improvement programme to refocus on Grubhub’s strongholds. Notably, Grubhub founder Matt Maloney announced earlier this month that he will be leaving at the start of December to pursue new opportunities.
Just Eat Takeaway.com reiterated its targets for the full year, targeting 45% annual order growth excluding Grubhub and gross transaction value of between EUR28 billion to EUR30 billion. It expects its adjusted Ebitda margin to be minus 1% to minus 1.5% of gross transaction value – implying a an adjusted Ebitda loss of around EUR280 million to EUR380 million.
Just Eat Takeaway.com delivered an adjusted Ebitda loss of EUR190 million in the first half of 2021, representing minus 1.3% of gross transaction value.
Where next for the Just Eat share price?
Just Eat Takeaway share price reached an all-time high in October 2020 of 10050p. Since then, the price has been trending lower. It trades below its descending trendline and below its 50 & 200 sma on the daily chart.
The RSI is just edging into oversold territory, so we could see some consolidation or even a move higher from here before the selloff continues.
The price is trading at an all time low so there are many levels to go by on the downside.
Any sign of a recovery would need to retake 5700p the October high in order to negate the near term down trend and aim towards the 50 sma st 6300p. A move above this level could see buyers gain traction whilst exposing the 200 sma at 6935p.
Barratt sales remain well ahead of pre-pandemic levels
Barratt Developments said there has been a slowdown in reservations and completions following the boom in the housing market seen last year, but said activity remains well ahead of pre-pandemic levels and supported by further rises in prices.
Barratt shares were up 3.5% this morning at 665.2p.
The housebuilder said it delivered 3,699 home completions in the first quarter spanning from the start of July to October 10 at an average asking price of £344,300. That is down from 4,032 completions in the same period a year earlier at £331,400, when demand was being supported by the pandemic-induced drive for more space and the stamp duty holiday.
Still, that was well ahead of the 3,252 homes sold for an average of £316,000 in 2019, before the pandemic hit.
Net private reservations averaged 281 per week in the period, down from 288 per week last year but above the 262 per week reported in 2019.
‘Whilst the net private reservation rate was 2.3% below that reported in the prior year period, this was a particularly active period reflecting both pent-up demand following the initial national lockdown, and increased Help to Buy reservation activity ahead of the tapering of H2B in December 2020 which excluded existing homebuyers and introduced regional price caps for first time buyers. Against a more relevant comparative period in FY20, the net private reservation rate is ahead by 18.1%,’ Barratt explained.
Total forward sales at October 10 stood at 15,393 homes, which has grown from 15,135 homes this time last year and from 12,963 homes in October 2019. It said it is now 71% forward sold for the financial year and that it expects to deliver 45% of annual completions to occur in the first half and 55% in the second.
Barratt reiterated its ambition to deliver 17,000 to 17,250 homes over the full year, with an additional 750 being built by its joint ventures.
Notably, Barratt said it has seen very minimal disruption from the widely-reported supply chain problems plaguing other industries, while any inflationary pressure is being more than offset by the continued rise in house prices.
The company also said Mike Scott will be joining the firm as its new chief financial officer on December 6, having poached him from smaller rival Countryside Properties.
THG board bemused after shares plunge 35%
THG said it ‘knows of no notifiable reason for the material share price movement’ that its stock experienced yesterday following a Capital Markets Day event.
THG shares plunged by more than 35% yesterday following the event. THG shares were down another 10% this morning t 255.9p, marking a fresh all-time low for the stock.
However, media reports suggested the dramatic fall was prompted by THG chief executive Matthew Moulding hitting out at short sellers and a disappointing presentation on its strategy, with no new information being disclosed to investors.
Management had hoped the event would give it the opportunity to better outline the prospects of its Ingenuity platform ahead of completing a major deal with Softbank, as well as other parts of the business, such as its plans to spin-off its beauty division in 2022.
THG said it has ‘consistently delivered ahead of its targets’ since listing and flagged that revenue was up over 44% in the first half of the year, putting in a solid position ahead of its peak trading season.
THG is set to report a third quarter update on October 26.
Darktrace tweaks guidance following strong growth
Darktrace said it continued to attract new customers and grew revenue by over 50% in the first quarter of its financial year, while also raising expectations for the full year due to better-than-expected foreign exchange rates.
The AI-driven cybersecurity firm said customer numbers grew 42.7% in the three months to the end of September to 5,975. New customers are the main driver of annual recurring revenue, which rose 63.8% year-on-year as a result to $24.1 million.
Darktrace said this ‘unusually high growth’ in annual recurring revenue was down to the weak comparatives from the year before, when demand was hit by the pandemic.
Still, the growth means annual recurring revenue at the end of September stood at $381.5 million, representing 45.9% growth from this time last year.
Actual revenue booked in the first quarter rose 50.8% year-on-year to $93.1 million.
The company reiterated its expectations for the full year but tweaked its revenue growth ambitions to 37% to 39% from its previous target of 35% to 37%. This is solely because foreign exchange headwinds are not expected to be as severe as previously thought. It said 47% to 48% of annual revenue will be booked in the first half, suggesting the second half will be slightly stronger.
‘We have continued our strong performance into the first quarter of FY 2022, growing our customer base, ARR and revenue. We remain focused on empowering organisations to interrupt cyber threats, before they experience a business disruption, using our leading Self-Learning AI technology,’ said chief financial officer Cathy Graham.
‘Looking ahead, we have reiterated FY 2022 guidance for ARR, net ARR added and adjusted Ebitda margin, while upgrading guidance on revenue growth due to a smaller-than-expected impact from foreign exchange headwinds in the first quarter,’ she added.
Darktrace shares were up 0.4% at 846.5p this morning.
NatWest to supply £100 billion of green funding by 2025
NatWest Group said it plans to provide £100 billion of sustainable and climate-related funding and financing by the end of 2025 as the bank steps up its efforts to help the UK and Ireland move toward their ambitions to become net-zero by 2050.
The bank announced in 2019 that it would provide £20 billion of similar funding between 2020 and 2022. It ended up bringing that forward to 2021 and, in the first half of this year, NatWest exceeded its target by delivering £21.5 billion.
As a result, NatWest is significantly stepping up its goal with plans to provide £100 billion of climate and sustainable funding and finance by the end of 2025.
‘Part of this new … target will also help to support the investment needed to transition the UK to a net zero economy and will help to support the bank's customers including SMEs on their transition to a net zero and a more sustainable economy,’ NatWest said.
Notably, the criteria used to decide if a project qualifies for the £100 billion of funding has been tweaked from what was used to dish out the initial £20 billion. This includes the removal of nuclear and energy-from-waste projects and the inclusion of sustainability bonds.
NatWest also said that the funds will supplement the general lending category, with customers able to qualify for the funding if they can prove at least 50% of their revenues are from activities outlined in its new criteria.
NatWest shares were up 0.2% this morning at 230.0p.
Marston’s says sales have returned to pre-pandemic levels
Pub operator Marston’s said like-for-like sales were above pre-pandemic levels over the past 10 weeks as the hospitality industry bounces back after a tough 18 months plagued by the pandemic and lockdowns.
The firm said sales between July 25 and October 2 were 2% higher than pre-pandemic levels. Drink sales were down 1% while food sales were up 2%.
Sales have steadily improved since pubs were able to reopen for outdoor service on April 12. Sales were 23% below pre-pandemic levels between April 12 and May 16 and then tracked just 8% lower between May 17 and July 24.
Combined, it means like-for-like sales were 6% below 2019 levels between April 12 and October 6.
‘The group's balanced estate, largely comprising community pubs nationwide with limited exposure to London and city centres, have supported this rapid return to above pre-pandemic levels. In addition, trading has been stronger in our premium pubs over the period. Accommodation sales have been excellent benefitting from the growth in staycation holidays,’ said the company.
Total pub sales in the year to October 2 came in at £402 million, representing 78% of what was delivered last year.
Marston’s also said it is coping with the widely-reported problems in attracting staff and rising costs. It said it is managing the labour shortage well and has only seen ‘small pockets of disruption’ in its supply chain.
Marston’s shares were down 0.2% this morning at 72.8p.
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