Over the past six months, DoorDash has been a great trade, beating the S&P 500 by 13.3%. Its stock price has climbed to $254.99, representing a healthy 36.2% increase. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy DASH? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On DASH?
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 20.3% annually to 761 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
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
DoorDash’s EPS grew at an astounding 109% compounded annual growth rate over the last three years, higher than its 28.2% 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
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, DoorDash’s margin expanded by 11.9 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 14.4%.
Final Judgment
These are just a few reasons why we're bullish on DoorDash, and with its shares outperforming the market lately, the stock trades at 33.4× forward EV/EBITDA (or $254.99 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
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