Dj Officer Amara Sells 12854 Of Yelp Inc >Yelp

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth Score

While good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Yelp (YELP)

San Francisco, CA-based Yelp, founded in 2004, is a website engaged in providing information through online community offering social networking. It covers restaurants, shopping, nightlife, financial services, health and a variety of services.

YELP is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 22.16; value investors should take notice.

Two analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.11 to $1.72 per share. YELP also boasts an average earnings surprise of 143.7%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, YELP should be on investors' short list.

Zacks Investment Research

Yelp Inc. YELP shares have lost 20.7% in the year-to-date period, underperforming the Zacks Computer Technology sector, Zacks Internet Content industry and the S&P 500’s return of 30%, 14.8% and 26.1%, respectively.

Given Yelp’s position as the leading source of reviews and ratings for local businesses, this underperformance is disappointing. This raises a crucial question for investors: Is it the right time to buy, hold or sell Yelp stock?

Yelp Faces Competitive and Economic Headwinds

Yelp’s Restaurant, Retail and Other segment is experiencing a deceleration in revenues for the past four consecutive quarters. It was due to persistent macroeconomic headwinds that have challenged restaurant and retail businesses which mainly utilize Yelp’s services in the RR&O category. In the third quarter of 2024, the RR&O division sales decreased 6% year over year to $116.4 million.

YELP is highly dependent on advertising revenues, which contribute to more than 95% of its total revenues. Ironically, its biggest chunk of revenues is dependent on its competitor, Google, which drives traffic toward Yelp’s website. Yelp faces significant competition from other advertising platforms owned by other Internet giants like Alphabet GOOGL, Microsoft MSFT and Meta META.

Google Maps, Google My Business, and search ads directly compete with Yelp's local business listings. Microsoft’s search engine, Bing, also provides local search results similar to Yelp’s listings. Meta’s Facebook and Instagram platforms are crucial competitors, offering business pages, targeted advertising and user-generated reviews.

Yelp YTD Performance

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

For value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Yelp (YELP)

San Francisco, CA-based Yelp, founded in 2004, is a website engaged in providing information through online community offering social networking. It covers restaurants, shopping, nightlife, financial services, health and a variety of services.

YELP is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

Momentum investors should take note of this Computer and Technology stock. YELP has a Momentum Style Score of A, and shares are up 9% over the past four weeks.

Two analysts revised their earnings estimate upwards in the last 60 days for fiscal 2024. The Zacks Consensus Estimate has increased $0.09 to $1.70 per share. YELP boasts an average earnings surprise of 143.7%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, YELP should be on investors' short list.

Zacks Investment Research

Yelp (YELP) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, YELP broke through the 200-day moving average, which suggests a long-term bullish trend.

The 200-day simple moving average is widely-used by traders and analysts, and helps establish market trends for stocks, commodities, indexes, and other financial instruments over the long term. The indicator moves higher or lower together with longer-term price moves, serving as a support or resistance level.

Shares of YELP have been moving higher over the past four weeks, up 9%. Plus, the company is currently a Zacks Rank #3 (Hold) stock, suggesting that YELP could be poised for a continued surge.

Once investors consider YELP's positive earnings estimate revisions, the bullish case only solidifies. No estimate has gone lower in the past two months for the current fiscal year, compared to 2 higher, and the consensus estimate has increased as well.

Investors may want to watch YELP for more gains in the near future given the company's key technical level and positive earnings estimate revisions.

Zacks Investment Research

Groupon GRPN is scheduled to report third-quarter 2024 results on Nov. 12.

For the third quarter of 2024, Groupon expects revenues in the band of $114-$120 million, indicating a 5-10% year-over-year decline. The Zacks Consensus Estimate for revenues is pegged at $119.02 million, implying a decline of 5.89% from the year-ago reported figure.

The consensus mark for loss is pegged at 25 cents per share. The company had incurred a loss of 12 cents per share in the year-ago quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

In the last reported quarter, Groupon delivered a negative earnings surprise of 100%. GRPN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same in one, the average being 107.77%.

Groupon, Inc. Price and EPS Surprise

Groupon, Inc. price-eps-surprise | Groupon, Inc. Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Groupon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

GRPN has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Consider

Solid momentum across the local category in the North American region is expected to have been a major growth driver of the company during the quarter under review.

Increasing focus on rebuilding its performance marketing channels, reducing reliance on promotional spending and improving supply quality through sales transformation efforts is likely to have contributed well to its top-line growth in the third quarter of 2024.

Rising demand across its enterprise customers is expected to have been a tailwind for the company in the to-be-reported quarter.

Growing momentum in Groupon’s things to do vertical is expected to have aided its revenue growth in the quarter under review.

Groupon’s increasing efforts to improve deal recommendations on the back of AI are likely to have boosted its performance in the third quarter.

However, sluggishness in its goods categories and a weakening international market are expected to have been major headwinds for the company. The consensus estimate for International revenues is pegged at $29 million, suggesting a fall of 8.1% year over year.

Unexpected site stability issues related to its cloud migration project have also been heavily affecting the company’s performance.

The Zacks Consensus Estimate for Goods revenues is pinned at $4.56 million, indicating a decline of 33.5% from the year-ago reported figure.

Groupon’s business model makes it heavily dependent on daily deals, which is a major headwind. Since most of the offerings are consumer discretionary products, demand is heavily dependent on macroeconomic conditions.

The company operates in a highly competitive market, wherein it faces significant competition from the likes of Yelp YELP, Rakuten, Travelzoo TZOO and Wowcher.

Given this, the ongoing market uncertainties, persistent inflation, looming recessionary fears, changing consumer demand and spending patterns are expected to have dampened the company’s near-term prospects in the quarter under review.

Price Performance & Valuation

Groupon has seen its stock decline 14.6% year to date, underperforming the Zacks Retail-Wholesale sector’s return of 25.3%. This pullback has some investors wondering if it is a selling opportunity for the high-growth software company ahead of third-quarter earnings results.

Year-to-Date Performance

It is also important to consider whether the stock's current valuation accurately reflects the company's long-term growth potential and ability to navigate the competitive landscape. Groupon is trading at a premium with a forward P/E ratio of 29.26X compared with the Zacks Internet - Commerce industry’s 25.36X, reflecting a stretched valuation.

GRPN’s P/E F12M Ratio Depicts Stretched Valuation

Investment Considerations: Balancing Risk and Reward

Groupon's upcoming third-quarter 2024 earnings are likely to reflect the company's continued struggles in an increasingly competitive local commerce landscape. Despite management's efforts to streamline operations and pivot toward higher-margin offerings, the platform's declining merchant base and waning consumer engagement raise concerns about sustainable growth. The recent cost-cutting initiatives, while necessary, may not be sufficient to offset the fundamental challenges in their business model. With local merchants increasingly adopting direct-to-consumer marketing strategies and younger consumers showing limited interest in daily deals, Groupon's path to meaningful profitability remains uncertain. The stock appears vulnerable to further downside if revenue continues its deteriorating trend.

Conclusion

Given Groupon's operational headwinds and uncertain growth trajectory, investors should exercise caution ahead of third-quarter 2024 earnings. The company's challenges in merchant retention and user acquisition suggest potential downside risks that outweigh immediate opportunities. We recommend investors remain on the sidelines until there are clear signs of sustainable revenue growth and operational efficiency improvements, making a better entry point likely to emerge in the future.

Zacks Investment Research