NEW YORK (TheStreet) -- Yelp (YELP) - Get Report stock is falling 8.76% to $22.29 on heavy trading volume on Tuesday, a day ahead of the company's 2015 third quarter financial results, expected after the market close on Wednesday.
Analysts have estimated a year-over-year drop in earnings, but a year-over-year increase in revenue for the quarter.
The company is expected to report a loss of 9 cents per share on $141.42 million in revenue for the latest quarter.
Last year, Yelp reported earnings of 5 cents per share on revenue of $102.46 million for the third quarter of 2014.
The San Francisco-based company manages a review website that allows consumers to share reviews, tips and photos of local businesses.
So far today, 3.75 million shares of Yelp have exchanged hands, compared with its average daily volume of 3.42 million shares.
Separately, TheStreet Ratings team rates YELP INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate YELP INC (YELP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 good cash flow from operations. 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 feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- YELP's very impressive revenue growth greatly exceeded the industry average of 10.2%. Since the same quarter one year prior, revenues leaped by 50.8%. 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 9.76, 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 90.20%. 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 -0.97% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 147.6% when compared to the same quarter one year ago, falling from $2.74 million to -$1.31 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 67.94%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 150.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full analysis from the report here: YELP