Yelp (YELP): Rethinking Valuation After a 12.5% One-Month Rebound and Weak One-Year Returns

Yelp (YELP) has been drifting a bit this year, and that uneven stock performance is exactly why some investors are taking a second look at the business behind the app.

See our latest analysis for Yelp.

Recent trading tells a more nuanced story, with a 12.5% 1 month share price return offering a short term rebound. However, the 1 year total shareholder return of negative 18.6% signals fading momentum despite still respectable three and five year gains.

If Yelp has you rethinking your watchlist, this could be a good moment to broaden your search and discover fast growing stocks with high insider ownership.

With growth still positive but the share price lagging, investors now have to decide whether Yelp’s current valuation underestimates its earnings power, or if the market is already pricing in all the future upside.

Most Popular Narrative: 10.1% Undervalued

With the narrative fair value sitting above Yelp’s last close of $30.96, the story centers on whether modest growth can still unlock upside.

The analysts are assuming Yelp's revenue will grow by 3.5% annually over the next 3 years. Analysts assume that profit margins will increase from 10.3% today to 12.0% in 3 years time.

Read the complete narrative.

Curious how steady, not spectacular, growth expectations can still justify a premium to today’s price? The real twist lies in future margins and shrinking share count.

Result: Fair Value of $34.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside could fade if weak restaurant and retail ad demand persists, or if intensifying competition from larger platforms further erodes user engagement.

Find out about the key risks to this Yelp narrative.

Build Your Own Yelp Narrative

If you would rather follow your own trail through the numbers instead of this storyline, you can build a custom view in just minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Yelp.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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