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

YELP INC (NYSE:YELP) was identified as a decent value stock through our screening process. The company combines solid financial health and profitability with an attractive valuation, making it a potential candidate for value investors. Below, we examine why YELP stands out.

Valuation

YELP’s valuation metrics suggest the stock is reasonably priced:

• P/E Ratio: At 16.10, YELP trades below the industry average (27.88) and the S&P 500 average (27.54).
• Forward P/E: The forward P/E of 11.84 is notably lower than the S&P 500’s 36.44, indicating potential upside.
• Enterprise Value/EBITDA: YELP is cheaper than 87% of its peers in the interactive media sector.
• Price/Free Cash Flow: The stock ranks better than 90% of industry competitors on this metric.

Financial Health

YELP’s balance sheet is strong, earning a Health Rating of 9/10:

• No Debt: The company has zero debt, eliminating solvency risks.
• Liquidity: A current ratio of 2.89 and quick ratio of 2.89 demonstrate ample short-term financial flexibility.
• Altman-Z Score: A score of 5.94 signals low bankruptcy risk, outperforming 81% of industry peers.

Profitability

With a Profitability Rating of 8/10, YELP delivers consistent earnings:

• Return on Equity (ROE): At 19.65%, YELP outperforms 91% of its sector.
• Operating Margin: 12.67%, better than 76% of competitors.
• Gross Margin: An industry-leading 90.88%, reflecting strong pricing power.

Growth

While growth is moderate (Growth Rating: 5/10), key positives include:

• EPS Growth: Earnings per share grew 36.31% in the past year and 24.97% annually over five years.
• Forward EPS Growth: Expected to rise 18.17% yearly, supporting valuation.

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

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.