Yelp Stock To Likely Trade Lower Post Q4

Yelp (NYSE: YELP), an online site for discovering local businesses ranging from bars, restaurants, and cafes, to hairdressers, spas, and gas stations, is scheduled to report its fiscal fourth-quarter results on Thursday, February 9. We expect the stock to see little to no movement post the fiscal Q4 release with earnings and revenues both missing expectations marginally. Yelp has guided for Q4 revenue to be about $300 to $310 million. It expects a more muted holiday season and less spending from multi-location advertisers in Q4. The consumer review site cut Q4 targets due to the tough economic environment, but revenue growth is still targeted at nearly 12%. Additionally, Yelp narrowed its FY 2022 revenue and adjusted EBITDA forecasts. It now sees FY 2022 revenue of $1.185 to $1.195 billion compared to the prior forecast of $1.18 to $1.20 billion. It also expects FY 2022 adjusted EBITDA in the range of $265 to $275 million vs. a prior forecast of $265 to $285 million.

Our forecast indicates that Yelp’s valuation is around $31 a share, which is about 4% lower than the current market price. Look at our interactive dashboard analysis on Yelp’s Earnings Preview: What To Expect in Fiscal Q4? for more details.

(1) Revenues expected to be slightly below consensus estimates

Trefis estimates Yelp’s Q4 2022 revenues to be around $304 Mil, in line with the consensus estimate. In Q3, the company generated net revenue of $308.9 million, up 15% year over year (y-o-y). Q3 cost per click was up a large 36% y-o-y, which led to the revenue increase. While Yelp’s ad clicks were down 15% y-o-y but its ad monetization is improving – meaning it’s making more per click.

2) EPS likely to marginally miss consensus estimates

Yelp’s Q4 2022 earnings per share (EPS) is expected to come in at 27 cents per Trefis analysis, marginally missing the consensus estimate. In Q3, the company’s earnings per share came in at 13 cents, down 46% y-o-y.

(3) Stock price estimate appears lower than the current market price

Going by our Yelp’s Valuation, we estimate revenue per share (RPS) to come at $15.12 and a P/S multiple of 2.0x in fiscal 2022, translating into a price of around $31, which is almost 4% lower than the current market price.

It is helpful to see how its peers stack up. YELP Peers shows how Yelp compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

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[1] Month-to-date and year-to-date as of 2/8/2023
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