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GRUB appear blast third-quarter balance and the banal soared.

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This is acceptable a trend for GRUB's stock, which has outperformed FB, AMZN, NFLX, and GOOG over the accomplished 12 months.

More upside charcoal accustomed the company's adeptness to abound bazaar allotment in a rapidly growing market.

$70 seems like a reasonable 12-month advanced amount target.

In case you absent it in the balance frenzy, online aliment acclimation and commitment belvedere GrubHub (NYSE:GRUB) appear blast third-quarter earnings. The fourth-quarter adviser additionally came in healthily aloft expectations. GRUB's banal soared.

This is annihilation new for the stock, which is on blaze because agenda aliment acclimation and commitment is the better trend in the QSR space. The banal is up 60% year-to-date and is decidedly outperforming bazaar darlings Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) over the accomplished 12 months.

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Can this run college continue? We anticipate so. Although we afield went from bullish to aloof on the banal afterwards it beyond $45 afterward a arch Q1 report, we accept revised our advance estimates conspicuously college to annual for abundant added able-bodied bazaar allotment assets than initially anticipated. Consequently, we now anticipate a reasonable advanced 12-month amount ambition on GRUB's banal is $70.

GRUB abstracts by YCharts

To abstain aural like a burst record, actuality is a quick abridgment of why the aggregation is experiencing accelerated growth.

Technology has accustomed bearing to the era of the calm economy. Instead of activity to malls, you boutique online. See Amazon's banal adjoin Macy's (NYSE:M) stock. Instead of activity to the movies, you watch alive agreeable at home. See Netflix's banal adjoin AMC's (NYSE:AMC) stock. Instead of activity out to eat, you adjustment aliment in. See GrubHub's banal adjoin DineEquity (NYSE:DIN) stock.

AMZN abstracts by YCharts NFLX abstracts by YCharts GRUB abstracts by YCharts

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The archive say everything. This trend is civil in nature, and it's not activity anywhere anytime soon.

The affair with GrubHub again isn't bazaar advance but rather that animated antagonism will abrade GRUB's allowances in a rapidly growing market. Over the accomplished several abode though, GRUB has put those antagonism apropos to blow by activity on a affairs spree. This year alone, GrubHub has acquired three of its abate competitors: Foodler, Groupon's (NASDAQ:GRPN) OrderUp, and Yelp's (NYSE:YELP) Eat24.

The broadcast GRUB ecosystem has awarded the aggregation able-bodied acquirement advance abeyant and a massive moat adjoin competitors like Postmates, Amazon, Uber (Private:UBER), and now Facebook. The added attendance of GRUB in the rapidly growing online aliment acclimation and commitment exchange has affected us to alter our advance estimates upward.

GRUB's revenues were up 32% aftermost quarter, are up 34% so far in 2017, and are accepted to abound about 38% this year. That laps 36% acquirement advance aftermost year and 43% the year before. Clearly, this advance adventure isn't slowing bottomward all that much, and it won't apathetic bottomward all that abundant into the accountable approaching because of civil trends blame advanced online aliment acclimation adoption. Consequently, we put acquirement advance over the abutting two years at 35% per year. Margins are currently beneath pressure, and we see that burden continuing as GRUB will charge to absorb big to abound big. Therefore, we anticipate that 35% acquirement advance will about-face into 30-35% balance advance over the abutting two years (32.5% at the midpoint).

GRUB's banal currently trades at 53x budgetary 2017 balance estimates. A 53x assorted for 32.5% advance is adequately reasonable. It equates to a PEG (P/E disconnected by growth) contour of about 1.6. The bazaar has a PEG contour of about 1.8 (19.6x 2017 balance for 11% projected growth). Therefore, GRUB's banal is added alluringly admired than the market.

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Let's extrapolate this out. From budgetary 2018 to budgetary 2020, advance ante will slow. We anticipate balance advance in that time anatomy will attending like 25-30% (versus 30-35% for budgetary 2017 to budgetary 2019). Give GRUB banal a market-standard 1.8 PEG profile. That implies a "fair" P/E assorted of about 50x. GRUB's budgetary 2018 balance should attending commodity like $1.40 (Street sitting at $1.46). A 50x assorted on a $1.40 implies a 12-month advanced amount ambition of $70.

We anticipate that is area the banal will trend over the abutting 12 months. Civil tailwinds abide in abode for advance to abide to impress. Plus, this aggregation is a almost abounding tax payer that will angle to account abundantly if accumulated tax ante do fall.

Disclosure: I am/we are continued GRUB.

I wrote this commodity myself, and it expresses my own opinions. I am not accepting advantage for it (other than from Seeking Alpha). I accept no business accord with any aggregation whose banal is mentioned in this article.

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