DoorDash’s 33.7% return over the past six months has outpaced the S&P 500 by 20.5%, and its stock price has climbed to $217.00 per share. This was partly thanks to its solid quarterly results, and the 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 Is DoorDash a Good Business?

Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ: 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 23.5% annually to 970 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. EBITDA Margin Reveals a Well-Run Organization

Investors regularly analyze operating income to understand a company’s profitability. Similarly, EBITDA is a common profitability metric for consumer internet companies because it excludes various one-time or non-cash expenses, offering a better perspective of the business’s profit potential.

DoorDash has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer internet business, boasting an average EBITDA margin of 20%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

3. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

DoorDash’s EPS grew at 98.3% compounded annual growth rate over the last three years, higher than its 27.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Final Judgment

These are just a few reasons why we’re bullish on DoorDash, and with its shares beating the market recently, the stock trades at 21.4× forward EV/EBITDA (or $217.00 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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