What to Expect From Yelp’s Stock Post Q1 Results?

by Trefis Team
-2.13%
Downside
38.83
Market
38.00
Trefis
YELP
Yelp
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Yelp (NYSE: YELP), an online site for discovering local businesses ranging from bars, restaurants, and cafes, to hairdressers, spas, and gas stations, is scheduled to report its fiscal first-quarter results on Thursday, May 6. We expect the stock to see little to no movement post the fiscal Q1 release with earnings beating expectations but revenues falling short. In Q4, the company saw sales falling under pandemic pressures, but profitability rising on the back of cost cuts. We expect a similar trend in the upcoming Q1, as local businesses such as restaurants continued to see reduced demand during this period. But, Yelp could enjoy a traffic rebound in the long term with the reopening of the U.S. economy and vaccine rollouts gaining steam.

Our forecast indicates that Yelp’s valuation is around $38 a share, which is largely around the current market price. Look at our interactive dashboard analysis on Yelp’s pre-earnings: What To Expect in Fiscal Q1? for more details.

(1) Revenues expected to be marginally below consensus estimates

Trefis estimates Yelp’s Q1 2021 revenues to be around $227.2 Mil, slightly below the consensus estimate of $228.3 Mil. The company saw Q4 revenues fall in double-digits due to advertising declines, but the growth trend was positive with revenue improving quarter-to-quarter in each of the last two quarters. It is worth mentioning that Yelp’s adjusted EBITDA margins grew 260 basis points year-over-year (y-o-y) in Q4 despite a double-digit revenue fall. For the full year 2021, we expect Yelp’s revenues to grow 14%  y-o-y to $997 million.

2) EPS likely to come in ahead of consensus estimates

Yelp’s Q1 2021 ear1nings per share (EPS) is expected to come in at a loss of 22 cents per Trefis analysis, ahead of the loss of 26 cents of the consensus estimate. The company saw a net loss of $19 million in 2020, resulting in -$0.27 in earnings per share. We expect the company to continue to post a loss in fiscal 2021 as well.

(3) Stock price estimate largely around the current market price

Going by our Yelp’s Valuation, with a revenue per share (RPS) estimate of $13.66 and a P/E multiple of 2.8x in fiscal 2021, this translates into a price of around $38, which is almost in line with the current market price

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.

See all Trefis Price Estimates and Download Trefis Data here

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