Yelp (YELP) Weak In Early Morning Trading

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.

Trade-Ideas LLC identified Yelp ( YELP) as a pre-market laggard 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 $452.7 million.
  • YELP traded 24,450 shares today in the pre-market hours as of 9:28 AM.
  • YELP is down 2.5% today from yesterday's close.

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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 96. Currently there are 17 analysts that rate Yelp a buy, 3 analysts rate it a sell, and 10 rate it a hold.

The average volume for Yelp has been 4.0 million shares per day over the past 30 days. Yelp has a market cap of $3.1 billion and is part of the technology sector and internet industry. The stock has a beta of 2.47 and a short float of 20.8% with 1.02 days to cover. Shares are down 10.8% 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 compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • YELP's very impressive revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues leaped by 55.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 7.81, 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 92.66%. 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 -1.08% significantly underperformed when compared to the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Internet Software & Services industry and the overall market, YELP INC's return on equity is below that of both the industry average and the S&P 500.
  • YELP has underperformed the S&P 500 Index, declining 13.30% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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