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Is Yelp (YELP) a Great Value Stock Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Yelp (YELP - Free Report) is a stock many investors are watching right now. YELP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 17.93 right now. For comparison, its industry sports an average P/E of 21.27. Over the last 12 months, YELP's Forward P/E has been as high as 35.07 and as low as 17.93, with a median of 24.19.

Investors should also recognize that YELP has a P/B ratio of 3.11. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 6.51. Over the past year, YELP's P/B has been as high as 4.48 and as low as 3.05, with a median of 3.87.

Finally, we should also recognize that YELP has a P/CF ratio of 10.69. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. YELP's P/CF compares to its industry's average P/CF of 22.92. Over the past 52 weeks, YELP's P/CF has been as high as 25.62 and as low as 10.49, with a median of 16.25.

Value investors will likely look at more than just these metrics, but the above data helps show that Yelp is likely undervalued currently. And when considering the strength of its earnings outlook, YELP sticks out at as one of the market's strongest value stocks.


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