Yelp (YELP) and Netflix (NFLX) Head to Head Survey

Yelp (NYSE: YELP) and Netflix (NASDAQ:NFLX) are both mid-cap technology companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Profitability

This table compares Yelp and Netflix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yelp 2.31% 2.20% 2.00%
Netflix 4.04% 14.56% 2.87%

Volatility and Risk

Yelp has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500. Comparatively, Netflix has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500.

Earnings & Valuation

This table compares Yelp and Netflix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yelp $713.07 million 5.28 -$4.67 million $0.23 197.35
Netflix $8.83 billion 10.84 $186.67 million $0.99 223.46

Netflix has higher revenue and earnings than Yelp. Yelp is trading at a lower price-to-earnings ratio than Netflix, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Yelp and Netflix, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yelp 1 15 19 0 2.51
Netflix 1 15 33 0 2.65

Yelp presently has a consensus target price of $43.88, suggesting a potential downside of 3.32%. Netflix has a consensus target price of $210.87, suggesting a potential downside of 4.68%. Given Yelp’s higher probable upside, analysts plainly believe Yelp is more favorable than Netflix.

Institutional & Insider Ownership

85.7% of Yelp shares are owned by institutional investors. Comparatively, 83.3% of Netflix shares are owned by institutional investors. 10.1% of Yelp shares are owned by insiders. Comparatively, 4.9% of Netflix shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Netflix beats Yelp on 11 of the 14 factors compared between the two stocks.

About Yelp

Yelp Inc. (Yelp) connects people with local businesses by bringing ‘word of mouth’ online and providing a platform for businesses and consumers to engage and transact. The Company offers local business review sites. Yelp provides a platform for consumers to share their everyday local business experiences with other consumers by posting reviews, tips, photos and videos, and to engage directly with businesses, through reviews, its Request-A-Quote and Message the Business features, and by completing transactions on the Yelp Platform. Yelp also provides businesses of all sizes with a range of free and paid services that help them engage with consumers. The Yelp Platform allows consumers to transact with local businesses directly on Yelp through Yelp Reservations, its online reservations product, and integrations with partners ranging from Shoptiques.com (boutique shopping) to GolfNow (tee time booking) to BloomNation (flower ordering).

About Netflix

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

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