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Are Investors Undervaluing Yelp (YELP) 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Yelp (YELP - Free Report) . YELP is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 17.60. This compares to its industry's average Forward P/E of 22.89. Over the past 52 weeks, YELP's Forward P/E has been as high as 35.07 and as low as 16.96, with a median of 23.77.

Investors should also note that YELP holds a PEG ratio of 0.68. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. YELP's PEG compares to its industry's average PEG of 1.49. Over the past 52 weeks, YELP's PEG has been as high as 0.68 and as low as 0.67, with a median of 0.67.

Another valuation metric that we should highlight is YELP's P/B ratio of 3.20. 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. YELP's current P/B looks attractive when compared to its industry's average P/B of 7.41. Within the past 52 weeks, YELP's P/B has been as high as 4.48 and as low as 3.04, with a median of 3.72.

Finally, our model also underscores that YELP has a P/CF ratio of 10.99. 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 23.43. Over the past year, YELP's P/CF has been as high as 24.16 and as low as 10.44, with a median of 14.34.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Yelp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, YELP feels like a great value stock at the moment.


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