Goodfood Stock Jumps 11%: Is it a Buy Before Earnings?

Goodfood (TSX:FOOD) stock jumped on news that it launched its one-hour delivery service in Ottawa on the eve of Q2 earnings.

| More on:
Arrowings ascending on a chalkboard

Image source: Getty Images.

Goodfood Marketplace (TSX:FOOD) jumped 11% on Monday, as the company announced one-hour delivery would begin in Ottawa.

What happened?

Goodfood stock will now offer its one-hour grocery delivery service in the Greater Ottawa Region, the company said in a statement on Monday. The move means Goodfood customers can now take advantage of the company’s grocery offerings, receiving their items within an hour.

Shares of Goodfood stock jumped 11% at the news. It was a big move, as the company has been falling at a steady rate since August of last year. Yet in the beginning of March, there has been some positive momentum, as the markets started to recover, and earnings get closer.

So what?

Earnings are clearly why Goodfood stock took this opportunity to announce the delivery service. But it was clearly more than just a new city getting fast delivery that made shares rise. Management also detailed its Dynamics 365 partnership with Microsoft. The technology allows the company to manage its supply-chain effectively to “maintain a customer-centric focus, and increase profitability.”

“With Dynamics 365, our team is able to focus on value-added tasks like sourcing new farms and artisanal producers that are key to the offering… This partnership and approach is one of the many initiatives driving out constant consumer-focused evolution and innovation in the grocery industry.”

Jonathan Ferrari, Goodfood chief executive officer

Furthermore, while the headline may say Goodfood stock offers a free delivery service, investors will be happy to note this is only for 90 days. Afterwards, a subscription of $5.99 per month can be purchased, or $2.99 per order. That offers further subscription revenue for the company to unlock.

Now what?

As mentioned, this is all before the company’s earnings report this week. During the last earnings report, Goodfood stock dropped after reporting a substantial increase in the company’s losses. Meanwhile, sales were slightly lower than the year before, though its customer count continues to grow.

Offering these new services will hopefully bring more customers back to Goodfood stock. The success of Ottawa after the launch in Toronto and Montreal could mean the company has a new revenue stream that could see stable income come. However, time will tell during the next earnings report.

Goodfood stock continues to have a target price of $3.89. That represents a potential upside of 18% as of writing.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns Goodfood Market Corp. The Motley Fool recommends Goodfood Market Corp.

More on Coronavirus

Plane on runway, aircraft
Coronavirus

Can Air Canada Double in 5 Years? Here’s What it Would Take

Air Canada (TSX:AC) stock has gone nowhere since 2020. Can this change?

Read more »

Senior housing
Stocks for Beginners

Home Improvement Stocks Are Set to Fall (When They Do, Buy These Like Crazy!)

Home improvement stocks are due to drop further in the coming months. But with solid underpinnings for the sector, it…

Read more »

An airplane on a runway
Coronavirus

Forget Boeing: Buy This Magnificent Airline Stock Instead

Boeing (NYSE:BA) stock is looking risky right now, but Air Canada (TSX:AC) stock? Much less so.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

Goeasy Stock: Buy, Sell, or Hold?

When it comes to smart buys, goeasy stock (TSX:GSY) is up there as one of the smartest money can buy.…

Read more »

Woman has an idea
Stocks for Beginners

Here’s Why Magna International Is a No-Brainer Value Stock

Magna stock (TSX:MG) has been climbing back once more, but still offers huge value for long-term minded investors.

Read more »

Aircraft wing plane
Coronavirus

1 TSX Stock Down 60% That Could Bounce Back Stronger

Air Canada (TSX:AC) stock got severely beaten down in the March 2020 COVID crash. Here's why it's probably not going…

Read more »

A bull and bear face off.
Stocks for Beginners

Down 30% in 3 Months, Is AC Stock a Buy Today?

Air Canada stock (TSX:AC) climbed this year and is still up 10% in the last year, but down 30% in…

Read more »

Airport and plane
Stocks for Beginners

This Bargain Stock Is the Cheapest It’s Been in Years

This top stock still trades below $25 per share, despite much positive movement. A strong opportunity could be in the…

Read more »