Why Yahoo (YHOO) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Yahoo! Inc. (YHOO) are down -4.16% to $33.42 on Thursday due to accusations from small business owners that a recent deal with Yelp (YELP) has removed years of positive business reviews from Yahoo.

Yelp recently experienced a sell off when it was reported the Federal Trade Commission disclosed over 2,000 complaints made against the review website by small business owners accusing the company of publishing only negative business reviews.

One small business owner from Massachusetts told The Wall Street Journal that once Yahoo! began posting reviews from Yelp, years of positive reviews about his hardwood flooring business disappeared and were replaced by one single unenthusiastic Yelp review.

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TheStreet Ratings team rates YAHOO INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate YAHOO INC (YHOO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 43.47% and other important driving factors, this stock has surged by 52.95% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, YHOO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 27.9% when compared to the same quarter one year prior, rising from $272.27 million to $348.19 million.
  • Although YHOO's debt-to-equity ratio of 0.08 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.30, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.75%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.50% is above that of the industry average.
  • Net operating cash flow has significantly increased by 118.30% to $347.73 million when compared to the same quarter last year. In addition, YAHOO INC has also vastly surpassed the industry average cash flow growth rate of 11.60%.
  • You can view the full analysis from the report here: YHOO Ratings Report

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