Just Eat analysis
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Analyze the strengths and weaknesses of Justeat's current financial position to consider
whether the new acquisition of hungryhouse is sustainable in the long term and if you
should keep or sell your investment.
As a current investor in Shell, I am aware of the fact that JustEat does not pay dividends
to its shareholders. Hence, my main focus will be on constant and sustainable growth of
the company which would lead to a share price appreciation and a high return on
investors investment, high profitability and cash flow position of the company is also
important to be able to judge if the company is able to sustain the acquisition. Lastly, in
the case of liquidation, it is also important that JustEat is able to repay its shareholders.
To get this information, the analysis of certain ratios are required such as their operating
profit margin to understand the profitability trend of the company, its cash flows to
asses the companies ability to withstand any unexpected cost arising from the
acquisition and lastly net asset per share to asses the company's ability to repay its
shareholders in case of liquidation.
Operating profit margin, tells us how profitable the company is after taking all expenses
into account excepts finance costs and tax. This is important because high profitability
indicates that the company is suitable in the long term. We can see that operating profit
margin has decreased by 32.6% from 19.3% to 13.3%
The reason is mainly due to high impairment charges (source: page 10 and note 5).