As Yelp (NYSE: YELP) gears up to release its fiscal Q4 results on February 15, this business bellwether is fresh off a commendable trajectory. The stock has scaled from $27 to $46 since the advent of 2023, outperforming a 31% ascent in the S&P index.
The surging stock value can be attributed to Yelp’s robust performance in the initial nine months of 2023. Its transition from local businesses and restaurants to a robust multi-location advertiser strength, coupled with an upswing in cost-per-click (CPC) rates, has solidified investor confidence. Yelp has forecasted its full-year 2023 revenue to range between $1.332 billion and $1.337 billion, with adjusted EBITDA estimated in the vicinity of $319 million to $324 million.
While Yelp’s stock has witnessed an impressive 30% growth from $35 in early January 2021 to its current standing, it’s vital to note that the ascent has been inconsistent. With returns of 11% in 2021, -25% in 2022, and an impressive 73% in 2023, Yelp significantly underperformed the S&P in 2021 and 2022. In the broader scope, outdoing the S&P 500 has been an arduous feat for several stalwarts in the Consumer Discretionary sector, including heavyweights like AMZN, TSLA, and TM, and even megacap luminaries such as GOOG, MSFT, and AAPL. In contrast, the Trefis High Quality (HQ) Portfolio, encompassing 30 stocks, has consistently outperformed the S&P 500 annually for the same period. What’s behind this anomaly? As a collective, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; exemplified by HQ Portfolio’s performance metrics.
Given the current macroeconomic ambiguity, fueled by soaring oil prices and elevated interest rates, the pivotal question arises: can Yelp potentially face a semblance of its 2021 and 2022 underperformance against the S&P, or are we poised to witness another substantial surge?
(1) Revenues expected to come in line with consensus estimates
Trefis projects Yelp’s Q4 2023 revenues to hover around $342 million, in sync with the consensus estimate. In Q3, Yelp garnered net revenue of $345 million, marking a 12% year-over-year (y-o-y) surge – propelled by a rise in average revenue per location. Despite inflationary pressures, the company witnessed a noteworthy 12% uptick in third-quarter advertising revenue, attributed to its substantial exposure to the restaurant industry. Forecasts anticipate Yelp’s 2023 fiscal year revenues to amass $1.3 billion, reflecting a commendable 12% y-o-y increase.
(2) EPS likely to match the consensus estimates
Yelp’s Q4 2023 earnings per share (EPS) is anticipated to stand at 38 cents as per Trefis analysis, aligning with consensus estimates. Q3 2023 saw a remarkable EPS leap to 79 cents from a paltry 13 cents in Q3 2022. Moreover, its adjusted EBITDA also experienced a 30% y-o-y rise, reaching a record $96 million.
(3) Stock price estimate aligns with the current market price
Based on Yelp’s Valuation, the prognosis indicates an earnings per share estimated at 98 cents and a P/E multiple of 45.1x for fiscal 2023, culminating in a projected price of approximately $44, commensurate with the prevailing market price.
Shedding light on peers can provide invaluable insights. The YELP Peers systematically details how Yelp stacks up against its counterparts across critical metrics, while Peer Comparisons furnish a juxtaposition of various companies across industries.
| Returns | Feb 2024 MTD [1] |
Since start of 2023 [1] |
2017-24 Total [2] |
| YELP Return | 4% | 66% | 19% |
| S&P 500 Return | 4% | 31% | 125% |
| Trefis Reinforced Value Portfolio | 3% | 42% | 628% |
[1] Returns as of 2/11/2024
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
