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A Look at Yelp’s Valuations

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Analysis of Yelp’s price and book value figures

Yelp (YELP) is trading at a price-to-book value of 2.9x. The stock’s price-to-sales value is 3.2x, while its price-to-estimated sales value for fiscal 2017 is 2.8x.

The company has an enterprise value (or EV) of $1.9 billion, which implies that the company has a current EV-to-trailing-12-month-sales multiple of 2.6x. The company’s EV-to-projected-sales multiple for 2017 is 2.3x, while its EV-to-estimated-sales multiple for 2018 is 1.9x.

In comparison, Amazon (AMZN), Twitter (TWTR), Alibaba (BABA), and eBay (EBAY)—Yelp’s peer companies in the Internet sector—have enterprise values of $458.3 billion, $9.9 billion, $343.4 billion, and $38.9 billion, respectively.

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Examining Yelp’s cash flow metrics

Yelp has cash on hand of $485 million. Its price-to-cash-flow and price-to-free-cash-flow ratios are 16.8x and 21.9x, respectively. For the trailing 12 months, the company’s EV-to-cash-flow multiple was 13.5x, and its EV-to-free-cash-flow multiple was 17.5x.

A look at Yelp’s EBITDA numbers

Yelp’s EBITDA[1. earnings before interest, tax, depreciation, and amortization] fell 15% to $44.9 million in 2016. Analysts expect the company to post EBITDA of $141.5 million in 2017.

Yelp stock has a price-to-EBITDA multiple of 54.1x.

Understanding Yelp’s earnings and sales

The EPS (earnings per share) of -$0.06 that Yelp posted in 2016 stemmed from total revenues of $752 million. Its revenues were up 27% that year.

Yelp’s revenues are expected to be $1 billion in 2017. This year’s sales are expected to yield EPS of -$0.08.

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