Just Eat shares hit as order growth slows

Shares in takeaway delivery platform Just Eat dropped nearly 9% on Tuesday after the company posted a full-year order update showing sales growth slowing year-on-year. 

Despite posting impressive growth of 36%, the firm has now reported slowing growth in every period since it listed in April 2014, and today's update will be a further worrying sign for investors regarding future growth and the rise of strong competition in Deliveroo and UberEats. 

However, it is worth noting that Deliveroo and UberEats can't be considered direct competition to Just Eat as they don't currently have the same reach outside of cities. Also, they connect people with restaurant food, normally at a higher price, whereas Just Eat aggregates the "takeaway" end of the delivery food market.

Broker Panmure Gordon & Co said the results were broadly in-line with its estimates, as it anticipated the fallout:

"The company has reported full-year order growth of +42% on a reported basis (PGE: +44%) and +36% on a like-for-like basis (PGE: +35%). Investors may be disappointed that there are no upgrades to full-year estimates and the shares could well be punished for this."

CEO David Buttress took a cautious tone in the update, saying the order growth put the firm in a "strong position" to deliver full-year results in line with guidance:

"Just Eat's reported order growth puts us in a strong position to deliver full year results in line with our previous financial guidance. We enter 2017 with continuing confidence in the business."

Just Eat shares had slipped 8.42% by 9:20 on Tuesday, with the firm's market cap at £3.62bn. The firm is trading at a forward P/E of c.95. Such a high ratio means any hint of bad news will see a strong reaction from the market.