$2.01 billion market cap Yelp Inc. (bellow) operates a platform that connects consumers with local businesses in the United States and internationally. The company’s advertising products cater to local businesses of various sizes and categories, including restaurants, shopping, beauty and fitness, health, home, local, automotive, professional, pets, events, real estate, financial services, and more. . .
Despite the challenging macroeconomic environment, YELP co-founder and CEO Jeremy Stoppelman sounded contrarian and bullish when announcing the company’s recent results. Based advertising platform and engaged audience. ”
The stock has gained 8.5% over the past month and closed its last trading session at $29.23. It is trading just above the 50-day moving average of $28.63.
Let’s take a closer look at the factors that make it worth the investment.
solid finances
In the third quarter of the fiscal year ended September 30, 2022, YELP’s net revenue increased 14.8% year-over-year, driven by record revenue in service categories and self-service and multi-location sales channels. A record $308.89 million.
Over the same period, YELP’s Adjusted EBITDA also increased 4.8% to a record $73.94 million, with net income attributable to common shareholders of $9.11 million, or $0.13 per share.
Efficient asset utilization by management
YELP’s gross margin of 91.25% over the past 12 months is well above the industry average of 50.32%. The company’s 12-month net profit margin of 3.40% also matches the industry average of 4.51%.
Plus YELP’s trailing 12-month ROCE, ROTCROTAs of 5.31%, 3.83%, and 3.82% match industry averages of 5.81%, 3.83%, and 2.23%, respectively.
Attractive valuation
YELP’s expected P/E is trading at 13.63x, 19.3% lower than the industry average of 16.89x. The stock’s forward EV/EBITDA multiple of 6.36 is 25.6% lower than the industry average of 8.55.
Additionally, YELP’s forward EV/sales multiple of 1.43 is 25.6% lower than the industry average of 1.93.
Favorable Analyst Quote
Analysts expect YELP’s revenue to grow 8.2% year-on-year to $1.29 billion for the fiscal year ending December 2023. EPS is expected to grow 26.1% year over year to $2.70 over the same period.
POWR Rating Reflects Promising Outlook
YELP’s strong fundamentals are POWR ratingThe stock has an overall rating of B, which is equivalent to a buy in our proprietary rating system. The POWR Rating is calculated by considering 118 different factors, with each factor being optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. YELP earns an A grade for value and quality, consistent with its low valuation and high profitability.
This puts YELP in 3rd place out of 60 stocks. the internet industry.
click here Additional POWR Ratings for YELP Growth, Sentiment, Momentum, and Stability can be found here.
Conclusion
In a 1987 letter to Berkshire Hathaway shareholders, Warren Buffett echoed his mentor Benjamin Graham, saying, “In the short term, the market is a voting machine; in the long term, it is a weighing machine. ‘ said.
YELP management was best positioned to assess the impact of improving fundamentals on the intrinsic value of the business and deviations from its current market capitalization, so the company’s board decided on a share repurchase program of two Approved an increase of $50 million.
Considering these factors, YELP can be a great investment for long-term returns.
How does Yelp Inc. (YELP) compare to its industry peers?
YELP has an overall POWR rating of B, which equates to a purchase. Alternatively, the investor may be B-rated industry peer Expedia Group, Inc.experience), trivago NV (TRVG), and Travelzoo (Two).
YELP shares traded at $29.64 per share Friday afternoon, up $0.41 (+1.40%). Year-to-date, YELP is up his 8.41%, while the benchmark S&P 500 index is up his 3.53% over the same period.
About the Author: Santanu Roy
Fascinated by the traditional and evolving factors that influence investment decisions, Santanu decided to pursue a career as an investment analyst. Before she switched to investment research, she was her associate at Cognizant’s Processes. With a master’s degree in business administration and a fundamental approach to business analysis, he aims to help individual investors identify the best long-term investment opportunities. more…
