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Aug 04, 2020

Specialty Online Service Firms Show Huge Discrepancies in Post-Meltdown Performances

The impact of the COVID-19 virus has been felt in almost every industry. In some cases the global health crisis has helped boost sales, especially for a number of online retailers and other companies that benefit from people working at home. However, the services offered by online firms have made a big difference.

Three companies that have seen extremely different results since the March low are TripAdvisor (TRIP), Yelp (YELP), and Zillow (Z). If you look at the services offered by these three companies, and if you think about what is happening within the industries they serve, you would be right to assume that Zillow has fared much better than TripAdvisor or Yelp in the last four and a half months.

TripAdvisor serves the travel industry and travel has slowed to a crawl as a result of the virus. Yelp provides reviews of restaurants and other businesses. With the economy coming to a halt or at least partially shutdown in almost all parts of the country, reviews of local businesses and traffic to Yelp has likely declined greatly.

Zillow offers various real estate services including buying and selling of homes, mortgages, and rental services. The real estate industry is changing drastically as a result of the virus and Zillow appears to be benefitting from that fundamental change.

All three of these companies will report earnings on August 6. Looking at Tickeron’s Outlook for the three, the outlook is a positive one. Tickeron has a positive outlook on this group and predicts a further increase by more than 4.00% within the next month with a likelihood of 59%.

The Scorecard shows a strong buy rating on TripAdvisor and buy ratings for both Yelp and Zillow.

The fundamental analysis indicators aren’t great for any of the three stocks. TripAdvisor shows three positive ratings and three negative readings. Yelp show two positive ratings and two negative ratings.

Also in the image above, look at the price changes for the past year. Zillow is up 38.2%, Yelp is down 30.14%, and TripAdvisor is down 47.19%. Since the March bottom in the market Zillow is up over 117% while TripAdvisor and Yelp are up less than 35%. The S&P is up over 47% since March 23.

Looking at the technical analysis screener we see that these three stocks show far more positive ratings. All three stocks have bullish signals from the MACD and Momentum indicators. Zillow and TripAdvisor both have bullish signals from the AROON indicator and Yelp gets a positive reading from the moving averages.

Since the beginning of July, all three stocks have outperformed the overall market and are carrying some upward momentum heading into their earnings reports.

Looking at the current EPS estimates for the three, expectations have been ratcheted down across the board. TripAdvisor was expected to earn $0.01 and is now expected to lose $0.66 per share. That is the biggest adjustment of the three and it marks the biggest change compared to last year.

Three months ago Yelp was expected to lose $0.34 for the quarter and now the expectations are for a loss of $0.51. The company earned $0.16 per share last year, so like TripAdvisor, the expectations are pretty bad.

Zillow has seen the smallest change in the EPS estimate, dropping from an expected loss of $0.36 to a loss of $0.49. The company lost $0.14 per share last year, but that hasn’t kept the stock from rallying.

One area where there seems to be a pretty strong consensus is in the analysts’ ratings. The buy percentage for TripAdvisor is 27.3%, Yelp’s is only 20%, and Zillow’s is 40.9%. The average buy percentage for stocks in general falls between 65% and 75%.

All three companies have short interest ratios that are higher than the average stock. The average ratio falls in the 3.0 range and that means TripAdvisor’s ratio is only slightly higher than average. Yelp and Zillow both show rather high short interest ratios and that could help the stocks move higher should earnings surprise investors in a positive manner. When short sellers have to cover their positions they have to buy the shares. If a stock is already rallying, short covering can add tremendous buying pressure to an already rising stock.

Overall it looks like the technical indicators are pointing to potential short-term gains for these three stocks. The sentiment indicators seem to suggest that any positives out of the earnings reports could help push the stocks higher. With so much bearish sentiment from analysts and short sellers, expectations seem to be pretty low. The fundamentals aren’t all that great for any of these three stocks at this time, but fundamental analysis is more long term in its outlook.

Related Ticker: YELP

YELP's RSI Oscillator ascends from oversold territory

The RSI Indicator for YELP moved out of oversold territory on February 28, 2024. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 26 similar instances when the indicator left oversold territory. In of the 26 cases the stock moved higher. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on March 27, 2024. You may want to consider a long position or call options on YELP as a result. In of 94 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for YELP just turned positive on March 05, 2024. Looking at past instances where YELP's MACD turned positive, the stock continued to rise in of 51 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where YELP advanced for three days, in of 314 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.

The 50-day moving average for YELP moved below the 200-day moving average on March 14, 2024. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where YELP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

YELP broke above its upper Bollinger Band on March 28, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. YELP’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.614) is normal, around the industry mean (17.555). P/E Ratio (29.385) is within average values for comparable stocks, (53.609). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (3.441). Dividend Yield (0.000) settles around the average of (0.025) among similar stocks. P/S Ratio (2.183) is also within normal values, averaging (23.627).

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. YELP’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 91, placing this stock better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

Notable companies

The most notable companies in this group are Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Spotify Technology SA (NYSE:SPOT), Baidu (NASDAQ:BIDU), Pinterest (NYSE:PINS), Tencent Music Entertainment Group (NYSE:TME), Snap (NYSE:SNAP), Twilio (NYSE:TWLO), Zillow Group (NASDAQ:Z).

Industry description

Companies in this industry typically license software on a subscription basis and it is centrally hosted. Such products usually go by the names web-based software, on-demand software and hosted software. Cloud computing has emerged as a major force in this space, making it possible to save files to a remote database (without requiring them to be saved on local storage device); as long as a device has access to the web, it can access the data and the software programs to run it. This has in many cases facilitated cost efficiency, speed and security of data for businesses and consumers. Alphabet Inc., Facebook, Inc. and Yahoo! Inc. are some well-known names in the internet software/services industry.

Market Cap

The average market capitalization across the Internet Software/Services Industry is 60.6B. The market cap for tickers in the group ranges from 1.11K to 1.94T. GOOGL holds the highest valuation in this group at 1.94T. The lowest valued company is MSEZ at 1.11K.

High and low price notable news

The average weekly price growth across all stocks in the Internet Software/Services Industry was 2%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 35%. MRPT experienced the highest price growth at 321%, while RWRDP experienced the biggest fall at -75%.

Volume

The average weekly volume growth across all stocks in the Internet Software/Services Industry was -16%. For the same stocks of the Industry, the average monthly volume growth was 1% and the average quarterly volume growth was 20%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 44
P/E Growth Rating: 73
Price Growth Rating: 53
SMR Rating: 79
Profit Risk Rating: 91
Seasonality Score: -9 (-100 ... +100)
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YELPDaily Signal changed days agoGain/Loss if shorted
 
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A.I.Advisor
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A.I. Advisor
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General Information

a company that hosts an online database of user generated reviews of local businesses

Industry InternetSoftwareServices

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Internet Software Or Services
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350 Mission Street
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https://www.yelp.com
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