Since Yelp Inc. (NYSE:YELP) released its earnings in June 2019, analysts seem cautiously bearish, with earnings expected to grow by 16% in the upcoming year relative to the higher past 5-year average growth rate of 45%. Currently with trailing-twelve-month earnings of US$55m, we can expect this to reach US$64m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Yelp in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The 24 analysts covering YELP view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for YELP, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$55m and the final forecast of US$110m by 2022, the annual rate of growth for YELP’s earnings is 25%. This leads to an EPS of $1.56 in the final year of projections relative to the current EPS of $0.66. Margins are currently sitting at 5.9%, which is expected to expand to 8.5% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Yelp, I've put together three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Yelp worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Yelp is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Yelp? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.