DoorDash's ROCE Indicates Compounding Machine

DoorDash has a ROCE of 4.8%, which underperforms the Hospitality industry average of 9.6%. However, the company's trend of ROCE shows that it is generating pre-tax profits from prior investments and has reinvested its earnings to generate higher returns. The stock has performed well over the last three years, and investors are accounting for these trends. Despite some risks, the company's reinvestment activities have paid off, making it a multi-bagger opportunity.

DoorDash (DASH) has been making waves in the hospitality industry with its strategic partnerships and reinvestment activities. The company recently announced a partnership with Untappd to enhance its beverage listings, aiming to provide users with detailed product information. This move comes amidst a notable earnings report showcasing increased sales and a shift from a net loss to net income [1]. Despite a 18% price move last quarter, aligning with broader market trends, investors remain optimistic about DoorDash's trajectory.

While DoorDash's return on capital employed (ROCE) stands at 4.8%, it underperforms the industry average of 9.6%. However, the company's trend of ROCE indicates a positive trajectory, with pre-tax profits from prior investments being reinvested to generate higher returns. Over the past three years, DoorDash has delivered a substantial total return of over 320.06% to its shareholders, outperforming the US Hospitality industry's 32.5% return [1].

The collaboration with Untappd could bolster DoorDash's platform by integrating an extensive beverage catalog, potentially enhancing user engagement and fostering growth in newer verticals. This development complements the company's strategic expansion efforts into international markets and diverse sectors such as grocery and retail [1]. Analysts expect the company's earnings to grow significantly, projecting it to reach US$3.1 billion by 2028, despite the current share price of US$247.33 trading below the analysts' consensus price target of US$290.91 [1].

DoorDash's recent earnings report showcasing profitability and the enhanced platform features from the Untappd collaboration could support upward revisions in revenue and earnings forecasts. Despite some risks, the company's reinvestment activities have paid off, making it a multi-bagger opportunity for investors.

References:
[1] https://simplywall.st/stocks/us/consumer-services/nasdaq-dash/doordash/news/doordash-dash-enhances-beverage-listings-through-untappd-par
[2] https://www.marketbeat.com/instant-alerts/filing-nomura-holdings-inc-increases-stock-holdings-in-toast-inc-tost-2025-08-31/