The expansive urban areas and the rising middle class have fueled the growing demand for convenient dining solutions. With busy lifestyles driving the need for efficiency, online food delivery services have surged. Ordering from a diverse range of restaurants at the click of a button has become increasingly popular.

Amid this boom, robust food delivery stocks Uber Technologies, Inc. (UBER), DoorDash, Inc. (DASH), and Quhuo Limited (QH) stand out. These companies have shown strong growth potential and could offer substantial returns due to their dominant positions in the food delivery market.

User-friendly apps and tech-driven driver networks are also revolutionizing food delivery. The pandemic's lockdowns and social distancing measures significantly boosted the sector, making delivery an essential service for struggling restaurants. As a result, food delivery is expected to remain a key part of the dining experience.

According to a report by Precedence Research, the global market for online food delivery services was valued at $70.62 billion in 2023 and is projected to reach $83.41 billion in 2024. By 2034, it is anticipated to grow to approximately $405.81 billion at a CAGR of 17.1%.

Considering these factors, let’s discuss the fundamentals of three food delivery stocks, starting with #3.

Stock #3: Uber Technologies, Inc. (UBER)

UBER creates and manages proprietary technology to link consumers with independent ride providers for ridesharing and other transport services. It operates through three main segments: Mobility; Delivery; and Freight, each catering to different transportation and logistics needs.

On May 13, UBER and Delivery Hero SE (DHER) agreed on a $950 million deal for UBER to acquire DHER’s foodpanda delivery business in Taiwan. The acquisition will enhance UBER’s global marketplace expertise by integrating foodpanda’s extensive Taiwanese coverage and connections with popular local brands.

In addition, on May 10, UBER and Instacart announced a strategic partnership to integrate Uber Eats restaurant delivery into the Instacart app. The partnership could boost UBER’s presence in the food delivery market by driving more business to restaurants and generating additional earning opportunities for couriers.

This collaboration is expected to further solidify UBER’s position as a leading player in the food delivery industry.

For the fiscal 2024 first quarter that ended March 31, 2024, UBER’s revenue increased 14.8% year-over-year to $10.13 billion. Its income from operations stood at $172 million, compared to a loss of $262 million in the previous year’s quarter. Moreover, the company’s adjusted EBITDA rose 81.6% from the prior year’s period to $1.38 billion.

As of March 31, 2024, UBER’s cash and cash equivalents amounted to $5.02 billion, up from $4.68 billion as  of December 31, 2023.

For the second quarter of fiscal 2024, which ended in June, analysts expect UBER’s revenue and EPS to increase 14.6% and 73.1% year-over-year to $10.58 billion and $0.31, respectively.  Likewise, the consensus revenue and EPS estimates of $10.94 billion and $0.35 reflect 17.7% and 248.6% year-over-year improvements, respectively.

Shares of UBER have gained 43% over the past nine months and 25.2% over the past year to close the last trading session at $61.91.

UBER’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Quality. It is ranked #53 in the 76-stock Technology - Services industry.

In addition to the POWR Ratings I’ve stated above, we also have UBER ratings for Momentum, Sentiment, Value, Growth, and Stability. Get all UBER ratings here.

Stock #2: DoorDash, Inc. (DASH)

DASH runs a local commerce platform connecting merchants, consumers, and Dashers. Its primary offerings are the DoorDash Marketplace and the Wolt Marketplace, available in over 25 countries, including the United States. The company also provides various platform services to facilitate local commerce.

On March 21, DASH and Wing launched their drone delivery partnership in the United States, beginning in Christiansburg, VA. This innovation allows local consumers to order Wendy’s® menu items via DASH's marketplace and receive deliveries by drone. It highlights DASH's commitment to pioneering advanced delivery methods, fostering rapid growth and enhanced market presence.

Moreover, on March 13, DASH’s expansion of SNAP/EBT payment options significantly boosts its service reach. With over 1.1 million SNAP/EBT cardholders using DASH since 2023, adding new grocery partners means over 6,000 locations now accept SNAP/EBT for grocery delivery. This development enhances DASH’s accessibility and appeal.

In the fiscal 2024 first quarter that ended March 31, 2024, DASH’s revenues amounted to $2.51 billion, showing a 23.5% year-over-year increase. Its gross profit amounted to $1.13 billion, showing a 22.6% year-over-year growth. Furthermore, DASH’s adjusted EBITDA was reported to be $371 million, an 81.9% year-over-year increase.

As of March 31, 2024, DASH’s cash and cash equivalents amounted to $3.12 billion, up from $2.66 billion as of December 31, 2023.

Analysts expect DASH’s revenue for the fiscal 2024 second quarter (ended June 2024) to increase 19% year-over-year to $2.54 billion, while its EPS for the same quarter is expected to grow 23.4% from the prior year’s period to $0.61. Also, the company has surpassed the consensus revenue estimates in all of the trailing four quarters.

Shares of DASH have gained 3.2% over the past six months and 22% over the past year to close the last trading session at $107.83.

DASH’s fundamentals are apparent in its POWR Ratings. The stock has a B grade for Quality and Growth. It is ranked #16 in the 27-stock Internet - Services industry.

In addition to the POWR Ratings I’ve stated above, we also have DASH ratings for Momentum, Sentiment, Value, and Stability. Get all DASH ratings here.

Stock #3: Quhuo Limited (QH)

Headquartered in China, QH runs a gig economy platform offering on-demand delivery services. It focuses on food preparation and delivery, groceries, fresh food, and mobility services such as ride-hailing, shared-bike maintenance, freight services, and vehicle exports.

On May 7, QH unveiled its plans to extend its successful on-demand delivery services to international markets, aiming to seize new growth opportunities globally. As a leading domestic player, QH plans to leverage its proven operational model and technical prowess to drive expansion beyond its current market.

To enter these new markets, QH will collaborate with local on-demand service platforms, integrating its services with regional providers and labor forces. The company is discussing with key platforms in the United States, Singapore, and Thailand, establishing a solid foundation for its global expansion strategy.

QH will harness its advanced Quhuo+ technology platform to enhance service efficiency through data analysis and AI. This approach will optimize order fulfillment, ensuring high performance and reliability across new markets.

By expanding internationally and utilizing its innovative technology, QH is poised to strengthen its position in the food delivery industry. This global expansion will diversify revenue streams and bolster QH's competitive edge, paving the way for long-term growth and industry leadership.

In the second half of 2023, which ended December 31, 2023, QH’s revenues increased marginally year-over-year to RMB 1.97 billion ($276.92 million). Its net income grew 15% from the year-ago value to RMB 11.70 million ($1.65 million), while EPS came in at RMB 0.23, up 15% from the prior year’s quarter.

Shares of QH have gained 2.3% intra-day and 4.7% over the past month to close the last trading session at $0.45.

QH’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Value, Sentiment, and Momentum. It is ranked #81 in the 136-stock Software - Application industry.

In addition to the POWR Ratings I’ve stated above, we also have QH ratings for Quality, Stability, and Growth. Get all QH ratings here.

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UBER shares were trading at $61.87 per share on Thursday afternoon, down $2.60 (-4.03%). Year-to-date, UBER has gained 0.49%, versus a 15.10% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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