Earnings Beat In The Cards For Yelp’s Stock?

YELP: Yelp logo

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 fourth-quarter results on Thursday, February 10. We expect the stock to trade higher post the fiscal Q4 release with earnings and revenues both beating expectations. The company saw Q3 revenues grow 22% year-over-year (y-o-y) to $269 million, which was the company’s best quarterly performance ever. The main driver for the growth was a jump in ad clicks, as the economy continues to normalize and more dining and shopping establishments reopen at normal hours. We expect this trend to continue in Q4 as well.

Our forecast indicates that Yelp’s valuation is around $37 a share, which is 7% higher than the current market price. Look at our interactive dashboard analysis on Yelp’s Earnings Preview: What To Expect in Fiscal Q4? for more details.

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(1) Revenues expected to be marginally above consensus estimates

Trefis estimates Yelp’s Q4 2021 revenues to be around $275 Mil, slightly ahead of the consensus estimate of $272 Mil. The growth in Q3 revenues  included a record revenue growth in Services and Self-serve, which grew 10% sequentially and 45% y-o-y. While Yelp’s overall Q3 revenue growth decelerated versus 52% y-o-y growth in Q2, but that was largely because comps are getting tougher as we compare them against the recovery phase of the pandemic in the back half of 2020. In addition, Yelp’s adjusted EBITDA rose 34% to $71 million in Q3, with margins that rose two points to 26% as compared to the prior year. For the full year, we estimate Yelp’s Revenues to grow 19% y-o-y to $1.03 Bil.

2) EPS likely to come in ahead of consensus estimates

Yelp’s Q4 2021 earnings per share (EPS) is expected to come in at 18 cents per Trefis analysis, ahead of the 14 cents consensus estimate. In Q3, the company’s earnings per share was 24 cents compared to a loss of 1 cent in the prior-year quarter.

(3) Stock price estimate higher than the current market price

Going by our Yelp’s Valuation, we estimate revenue per share (RPS) to come at $14.20 and a P/S multiple of 2.6x in fiscal 2021, translating into a price of around $37, which is almost 7% higher than the current market price.

It is helpful to see how its peers stack up. YELP Peers shows how Yelp compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

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Returns Feb 2022
MTD [1]
YTD [1]
Total [2]
 YELP Return 0% -4% -9%
 S&P 500 Return 0% -5% 102%
 Trefis MS Portfolio Return 0% -9% 258%

[1] Month-to-date and year-to-date as of 2/9/2022
[2] Cumulative total returns since the end of 2016

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