DoorDash’s 31.6% return over the past six months has outpaced the S&P 500 by 28.5%, and its stock price has climbed to $241 per share. This run-up might have investors contemplating their next move.
Is now still a good time to buy DASH? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive On DoorDash?
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE: DASH) operates an on-demand food delivery platform.
1. Orders Skyrocket, Fueling Growth Opportunities
As a gig economy marketplace, DoorDash generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, DoorDash’s orders, a key performance metric for the company, increased by 21% annually to 732 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
2. Outstanding Long-Term EPS Growth
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
DoorDash’s EPS grew at an astounding 105% compounded annual growth rate over the last three years, higher than its 28.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, DoorDash’s margin expanded by 11.3 percentage points over the last few years. This is encouraging because it gives the company more optionality. DoorDash’s free cash flow margin for the trailing 12 months was 16.1%.
Final Judgment
These are just a few reasons why DoorDash is one of the best consumer internet companies out there, and with its shares beating the market recently, the stock trades at 36× forward EV/EBITDA (or $241 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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