The average target price of ROO.L is 168 and suggests 4% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 225.0. This translates into 29% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 115.0. This is equivalent to 34% downside potential in the worst case. 

Deliveroo plc operates an online food delivery platform. The company connects local consumers, restaurants and grocers, and riders to fulfil a purchase. It operates approximately more than 800 locations across 11 markets, including Australia, Belgium, France, Hong Kong, Italy, Ireland, the Netherlands, Singapore, the United Arab Emirates, Kuwait, and the United Kingdom. The company was founded in 2013 and is headquartered in London, the United Kingdom.

Deliveroo plc

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

ROO.L reported revenue of GBP 2 072mn in the last 12 months, up 2% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 0% from FY23 to GBP 0.00. Market expects EPS to reach GBP 0.02 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. When compared to its international counterparts in the same sector and industry (as shown above), the stock has exceeded their performances, leading by 34ppts in total. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months it exceeded the performance of this peer group by 35ppts and accelerated its growth by 34ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 3.8% in the last 12 months, a decline from 4.2% in FY23. 

Historically, ROO.L has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.1%, a growth from -1.6% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to 0.3% in the last 12 months, an increase from 0.2% in FY23. The market analysts predict that RoA will be -0.2% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 0.5%, below the peers. The consensus estimate for FY24 for RoCE is -1.7%, again behind the peers. 

Deliveroo plc reported a return on equity (RoE) of 0.6% in the last 12 months, up from 0.4% in FY23. The market consensus projects an RoE of -0.4% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.3 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

ROO.L has below average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is unstable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility, strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, and negligible return on capital.

In highly turbulent market conditions, ROO.L is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, ROO.L is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Deliveroo plc

£ 174.7

4

Deliveroo plc

£ 174.7

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

£ 174.7

About

About

Deliveroo plc

£ 174.7

4

Deliveroo plc

£ 174.7

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

£ 174.7

About

About

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