Yelp Inc. YELP is set to report fourth-quarter 2016 results on Feb 9. Though in the last quarter, the company posted a 200.00% positive earnings surprise, it has an average four-quarter negative earnings surprise of 142.86%.
Let's see how things are shaping up for this quarter.
Factors to Consider
Yelp delivered strong results in the third quarter, surpassing both top- and bottom-line expectations on the back of significant improvement in cumulative reviews and local advertising accounts. Nearly 70% of the paid reviews came from Yelp's mobile app, per management. Given its strong results, management had raised its revenue expectations for the fiscal.
However, Yelp's international business has been a dampener. Management said it will be downsizing its international operations and channelling the resources to strengthen its core operations in the U.S and Canada, which is a positive in our view.
Nonetheless, stiff competition from players like Uber, GrubHub GRUB , OpenTable and Amazon and even major tech companies like Google and Facebook among others, is a big concern. All these companies are increasing their efforts to get a bigger share of the market.
For the fourth quarter, management expects revenues in a range of $191 million to $195 million.
Yelp Inc. Price and EPS Surprise
Our proven model does not conclusively show that Yelp is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP : Yelp has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 3 cents.You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank : Yelp has a Zacks Rank #1 (Strong Buy) which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Pandora Media, Inc. P with an Earnings ESP of +10.81% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .
Activision Blizzard, Inc. ATVI with an Earnings ESP of +2.78% and a Zacks Rank #3.
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