Yelp, the popular online platform for discovering local businesses, is scheduled to release its fiscal third-quarter results on Thursday, November 2. Analysts anticipate that the stock will experience an upward trajectory following the release, as revenues are expected to meet consensus estimates and earnings are projected to beat expectations.
Throughout the year, Yelp's stock has shown significant growth, climbing from around $27 to $41 year-to-date (YTD). This rise can be attributed to better-than-anticipated results in the first half of 2023. Additionally, Yelp's shift from local businesses and restaurants to multi-location advertising strength and an increase in cost-per-click rates are expected to contribute to its continued success.
Yelp has provided guidance for its full-year 2023 revenue to be in the range of $1.32 billion to $1.33 billion, reflecting a $20 million increase compared to its previous outlook. Furthermore, the company expects adjusted EBITDA in the range of $310 million to $320 million, indicating a $15 million increase compared to its previous outlook.
Although Yelp's stock has witnessed gains of 15% from early 2021 to the present, the increase has not been consistent. Returns for the stock were 11% in 2021, -25% in 2022, and an impressive 50% in 2023. In comparison, the S&P 500 exhibited returns of 27% in 2021, -19% in 2022, and 7% in 2023. This suggests that Yelp underperformed the S&P in previous years.
However, beating the S&P 500 has proven challenging for individual stocks and even major players in various sectors, such as Amazon, Tesla, and Google. In contrast, the Trefis High Quality Portfolio consisting of 30 stocks has consistently outperformed the benchmark index each year over the same period.
As Yelp faces the current uncertain macroeconomic environment characterized by high oil prices and elevated interest rates, there is speculation regarding whether the company may underperform the S&P 500 in the next 12 months or experience a robust surge.
Trefis analysis indicates that Yelp's valuation is approximately $44 per share, which is about 7% higher than the current market price. For a more detailed analysis, readers can refer to the interactive dashboard analysis on Yelp's Earnings Preview: What To Expect in Fiscal Q3?
In terms of revenues, Trefis estimates that Yelp's Q3 2023 revenues will be around $342 million, aligning with the consensus estimate. In Q2, Yelp achieved net revenue of $337 million, a 13% year-over-year increase driven by higher average revenue per location.
Earnings per share (EPS) are anticipated to surpass consensus estimates in Q3, with Trefis analysis projecting 37 cents. Yelp's EPS grew to 21 cents in Q2 2023 from 11 cents in Q2 2022, accompanied by a 25% year-over-year increase in adjusted EBITDA to a record $84 million.
Considering our valuation, Yelp's estimated EPS for fiscal 2023 is 98 cents with a P/E multiple of 45.1x, resulting in a price of approximately $44, representing a nearly 7% increase compared to the current market price.
It is instructive to compare Yelp to its peers to gain further insights. The YELP Peers section provides a comprehensive comparison of Yelp's performance against its competitors in relevant metrics. For a broader perspective, readers can explore Peer Comparisons, which offers useful comparisons across various industries.