Yelp (YELP) Is Today's Perilous Reversal Stock

Trade-Ideas LLC identified Yelp (YELP) as a "perilous reversal" (up big yesterday but down big today) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Yelp

(

YELP

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Yelp as such a stock due to the following factors:

  • YELP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.8 million.
  • YELP has traded 253,695 shares today.
  • YELP is down 4.4% today.
  • YELP was up 11.2% yesterday.

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More details on YELP:

Yelp Inc. operates a platform that connects people with local businesses in the United States. YELP has a PE ratio of 88. Currently there are 8 analysts that rate Yelp a buy, 2 analysts rate it a sell, and 19 rate it a hold.

The average volume for Yelp has been 2.9 million shares per day over the past 30 days. Yelp has a market cap of $1.9 billion and is part of the technology sector and internet industry. The stock has a beta of 1.25 and a short float of 22.9% with 3.34 days to cover. Shares are down 48.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Yelp as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 40.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • YELP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.55, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for YELP INC is currently very high, coming in at 90.09%. Regardless of YELP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YELP's net profit margin of -5.62% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $9.86 million or 48.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 49.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 320.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, YELP is still more expensive than most of the other companies in its industry.

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