What To Expect From Yelp’s Stock Post Q1?

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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 5. We expect the stock to trade higher post the fiscal Q1 release with earnings and revenues both beating expectations. Yelp has been able to maintain high-teens revenue growth rates and upticks in usage and review creation in 2021 – in terms of company metrics. While Yelp experienced downtime for the large part of 2020, the company has used this time to streamline its strategy. By reducing its headcount in its lower revenue-generating Local division and putting more focus on its multi-location sales teams, Yelp’s adjusted EBITDA has grown massively by 76% year-over-year (y-o-y) to $246 million. 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 Q1 as well.

Yelp has issued strong guidance for fiscal 2022 – with $1.16-$1.18 billion in revenue, representing 12-14% y-o-y revenue growth, and $260-$280 million in adjusted EBITDA (6 to 14% EBITDA growth) on a 23% adjusted EBITDA margin.

Our forecast indicates that Yelp’s valuation is around $35 a share, which is 4% higher than the current market price. Look at our interactive dashboard analysis on Yelp’s Earnings Preview: What To Expect in Fiscal Q1? for more details.

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(1) Revenues expected to be marginally above consensus estimates

Trefis estimates Yelp’s Q1 2022 revenues to be around $269 Mil, slightly ahead of the consensus estimate. Yelp’s Q4 revenue increased 17% y-o-y to $273.4 million. The company saw a 9% y-o-y growth in its cumulative reviews, which were also 19% above the same period in 2019. Meanwhile, the number of app-unique devices also grew 6% y-o-y and reached 91% of 2019 levels. In addition, the number of diners seated via Yelp Reservations grew 85% y-o-y in 2021, largely due to an easy pandemic comparison. We forecast Yelp’s Revenues to be $1.2 billion for the next fiscal year 2022.

2) EPS likely to come in ahead of consensus estimates

Yelp’s Q1 2022 earnings per share (EPS) is expected to come in at a loss of 7 cents per Trefis analysis, ahead of the consensus estimate. In Q4, the company’s earnings per share was 30 cents, up 11% y-o-y.

(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 $15.28 and a P/S multiple of 2.3x in fiscal 2022, translating into a price of around $35, which is almost 4% 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.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 YELP Return 4% -7% -12%
 S&P 500 Return 1% -12% 87%
 Trefis Multi-Strategy Portfolio 2% -15% 233%

[1] Month-to-date and year-to-date as of 5/4/2022
[2] Cumulative total returns since the end of 2016

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