Can Strong Earnings Drive Yelp (YELP) Stock Higher?

Saturday, May 4, 2019 7:50 AM | Michael Fowlkes

What's Happening with yelp

Yelp (YELP) will report its first-quarter numbers May 9. The company will report after the market close with analysts expecting earnings of two cents per share on sales of $236.3 million. During the same period last year Yelp lost three cents on revenue of $223 million. YELP stock is up 16.5% year to date.

Technical Analysis

YELP stock was recently trading at $40.78 down $11.72 from its 12-month high and $11.45 above its 12-month low. InvestorsObserver's Stock Score Report gives YELP a 57 long-term technical score and a 52 short-term technical score. The stock has recent support above $34 and recent resistance below $44. Of the 23 analysts who cover the stock 4 rate it Strong Buy, 1 rate it Buy, 16 rate it Hold, 0 rate it Sell, and 2 rate it Strong Sell, YELP gets an overall score of 42 from InvestorsObserver's Stock Score Report.

Analysts' Thoughts

YELP stock has been rocky since going public in 2012. After an initial surge the stock took big losses in 2015 and shares have been stuck in a sideways pattern over the last two years. Holding YELP back at this point is the stock's valuation. Shares are trading at 65 times earnings and 41 times future earnings. The company is growing, with profits up 41% per annum over the last five years and profits are expected to rise at an annual rate of 33% over the next five years, but the company has struggled to deliver revenues as expected. YELP delivered big positive earnings surprises the last two quarters, but in each instance sales fell short of analyst estimates which has prevented a significant rally despite the strong earnings numbers. The street expects another earnings beat with a whisper number of five cents per share. Another positive earnings surprise could push the stock higher, but YELP will need to deliver better than expected top line numbers as well for any meaningful gains following the quarterly report. Analysts think the stock is fairly priced at this point with an average price target of $40.28.

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