Up 27% year over year! Is this FTSE 250 stock a good opportunity?

Deliveroo (LSE:ROO), one of the most popular food delivery companies, has been growing rapidly in value in recent years. In my opinion, this is one of the most exciting companies in the country FTSE 250and there is probably a lot of room for improvement.

With a strong international expansion plan underway and smart operational strategies, Deliveroo is without a doubt the best investment for me to consider owning.

Lots of growth opportunities in the future

The company currently operates in 12 countries, and I am impressed by its rapid international strategy. Entered and exited various markets to improve results. For example, it has exited Germany, Taiwan, Spain, Australia, and the Netherlands, while introducing new markets such as Kuwait and Qatar.

In addition, to support its growth, Deliveroo is expanding its grocery delivery service. This has already shown strong performance in the UK and the United Arab Emirates.

It is also expanding into non-food stores, such as toys and electronics. In addition, Deliveroo Hop, its fast grocery delivery service with fast delivery times and a wide selection of groceries, could attract more customers.

Stocks are not cheap

Although the company has a favorable international market position, the shares are not cheap. With a price-to-sales (P/S) ratio of 1.21, much higher than the industry median of 0.64, this is quite a risk.

However, the market has a large investment value for a reason. It has delivered strong revenue growth over the past five years, averaging 34%.

In my opinion, the stock is not too expensive to invest in. However, I don't think that with a large share in my portfolio, if I invest because there is still a high volatility risk due to P/S. average.

Its scores may be under pressure

Deliveroo has big competitors, including Uber Eat again Just eat itand has a reduction in market share from direct-to-consumer delivery, such as Domino's Houses provides.

The food delivery industry also has low margins, driven by high operational and operational costs. Currently, the company has only about 2.6% equity. Therefore, it also has less free cash flow. This means that it can develop less financial security than one would want from an investment.

Given the competition, it may be worth assessing whether Deliveroo may face future pricing pressure. This is also especially true during a time when automated delivery may be the norm. If managers fail to introduce appropriate technological innovations, the price may be reduced by other delivery providers who do so successfully.

However, this business is still in its early days, and I expect its gross margin to grow. It only reported free cash flow and profit for the first time in 2024.

I am waiting for a better rating

Deliveroo is a service I use frequently, and it's an investment that I believe has a lot of room to grow in value over time.

I am really happy with these stocks. However, because the valuation is too high, I have decided not to invest yet. Instead, I'll see if it's cheaper in the long run; well, i will buy my stake.