Yelp (YELP) Is Today's Unusual Social Activity Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Yelp ( YELP) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Yelp as such a stock due to the following factors:

  • YELP has 12x the normal benchmarked social activity for this time of the day compared to its average of 42.00 mentions/day.
  • YELP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $299.8 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on YELP:

Yelp, Inc. operates Yelp.com, an online urban city guide that helps people find places to eat, shop, drink, relax, and play based on the informed opinions of a community of locals in the know. Currently there are 13 analysts that rate Yelp a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Yelp has been 2.8 million shares per day over the past 30 days. Yelp has a market cap of $4.5 billion and is part of the technology sector and internet industry. Shares are up 9.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Yelp as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 decreased by 15.5% when compared to the same quarter one year ago, dropping from -$2.01 million to -$2.32 million.
  • YELP INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, YELP INC reported poor results of -$0.30 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.30).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, YELP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YELP INC is currently very high, coming in at 93.01%. 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 -3.79% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly increased by 882.30% to $6.99 million when compared to the same quarter last year. In addition, YELP INC has also vastly surpassed the industry average cash flow growth rate of 12.76%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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