YELP INC (NYSE:YELP) – A Potentially Undervalued Stock with Strong Fundamentals

YELP INC (NYSE:YELP) was identified by our stock screener as a decent value candidate, offering a combination of reasonable valuation, solid profitability, and healthy financials. The company operates a community-driven platform connecting users with local businesses, and its fundamentals suggest it may be trading below its intrinsic value.

Valuation

YELP’s valuation metrics indicate it may be attractively priced:

• P/E Ratio: At 16.19, it trades below the industry average (26.34) and the S&P500 average (26.34).
• Forward P/E: 11.89, cheaper than 74.65% of its peers.
• Price/Free Cash Flow: More affordable than 87.32% of companies in its sector.
• Enterprise Value/EBITDA: 83.10% of industry peers are more expensive.

These metrics suggest YELP is priced conservatively relative to its earnings and cash flow potential.

Financial Health

The company maintains a strong balance sheet:

• No Debt: YELP has zero outstanding debt, reducing financial risk.
• Liquidity: Current and Quick Ratios of 2.89 indicate ample ability to meet short-term obligations.
• Altman-Z Score: 5.97 signals low bankruptcy risk, outperforming 80.28% of competitors.

Profitability

YELP generates solid returns:

• Return on Assets (ROA): 14.52%, ranking in the top 10% of its industry.
• Return on Equity (ROE): 19.65%, outperforming 91.55% of peers.
• Operating Margin: 12.67%, above 76.06% of sector competitors.
• Profit Margin Growth: Improved over recent years, reaching 9.95%.

Growth

While growth is moderate, key areas show strength:

• EPS Growth: Up 36.31% YoY, with a 3-year average of 24.97%.
• Revenue Growth: 5.93% YoY, with steady historical expansion.
• Forward EPS Growth: Expected at 18.17% annually.

Our Decent Value screener lists more stocks with similar characteristics. For a deeper dive, review the full fundamental report on YELP.

Disclaimer

This is not investment advice. The observations here are based on available data at the time of writing. Always conduct your own research before making investment decisions.