YELP INC (NYSE:YELP) stands out as a potential choice for investors seeking growth at a reasonable price (GARP). The company, known for its community-driven platform connecting users with local businesses, meets several key criteria outlined in Peter Lynch’s investment strategy.
Why YELP Fits the GARP Approach
- Strong Earnings Growth: YELP has delivered an impressive 5-year average EPS growth of 24.97%, well above the 15% minimum threshold Lynch favors. This indicates consistent profitability.
- Attractive Valuation: With a PEG ratio of 0.64 (below Lynch’s preferred threshold of 1), the stock appears reasonably priced relative to its growth prospects.
- Healthy Financials: The company has no debt (Debt/Equity of 0) and a solid current ratio of 3.34, reflecting strong liquidity and financial stability.
- High Profitability: YELP’s Return on Equity (ROE) of 17.86% exceeds the 15% benchmark, signaling efficient use of shareholder capital.
Fundamental Highlights
YELP’s financial health and profitability are rated highly, with strong margins and cash flow generation. The company outperforms most peers in its industry, particularly in return metrics like ROE and ROIC. While its valuation is slightly elevated based on traditional P/E, the PEG ratio suggests the stock remains fairly priced given its growth trajectory.
For a deeper look, review the full fundamental analysis of YELP.
Our Peter Lynch Strategy screener lists more stocks that align with this strategy and is updated regularly.
Disclaimer
This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own research before making investment decisions.
