ZoomInfo Technologies (NASDAQ:GTM) and Yelp (NYSE:YELP) Critical Analysis

Yelp (NYSE:YELP) and ZoomInfo Technologies (NASDAQ:GTM) are both small-cap communication services companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Institutional & Insider Ownership

90.1% of Yelp shares are owned by institutional investors. Comparatively, 95.5% of ZoomInfo Technologies shares are owned by institutional investors. 8.3% of Yelp shares are owned by company insiders. Comparatively, 9.9% of ZoomInfo Technologies shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Yelp has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500. Comparatively, ZoomInfo Technologies has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Yelp and ZoomInfo Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yelp	3	3	1	0	1.71
ZoomInfo Technologies	7	10	1	0	1.67

Yelp presently has a consensus price target of $25.57, suggesting a potential upside of 23.59%. ZoomInfo Technologies has a consensus price target of $5.93, suggesting a potential upside of 37.54%. Given ZoomInfo Technologies’ higher possible upside, analysts clearly believe ZoomInfo Technologies is more favorable than Yelp.

Valuation and Earnings

This table compares Yelp and ZoomInfo Technologies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yelp	$1.46 billion	0.77	$145.60 million	$2.09	9.90
ZoomInfo Technologies	$1.25 billion	1.00	$124.20 million	($1.86)	-2.32

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

Profitability

This table compares Yelp and ZoomInfo Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yelp	8.59%	19.52%	13.44%
ZoomInfo Technologies	-43.01%	20.16%	4.33%

Summary

Yelp beats ZoomInfo Technologies on 7 of the 13 factors compared between the two stocks.

About Yelp

Yelp Inc. operates a platform that connects consumers with local businesses in the United States and internationally. The company's platform covers various categories, including restaurants, shopping, beauty and fitness, health, and other categories, as well as home, local, auto, professional, pets, events, real estate, and financial services. It provides free and paid advertising products to businesses, which include cost-per-click advertising and multi-location Ad products, as well as enables businesses to deliver targeted advertising to large and high-intent audience; and business listing page products. The company also offers other services comprising Yelp Guest Manager, a subscription-based suite of front-of-house management tools for restaurants, nightlife and certain other venues, which include online reservations, a waitlist management solution that allows consumers to check wait times and join waitlists remotely, as well as through hostless kiosks, and seating and server rotation management tools; Yelp Knowledge program that offers business owners local analytics and insights through access to its historical data and other proprietary content; and Yelp Fusion, which offers free access to various basic information through publicly available APIs, and paid access to content and data for consumer-facing enterprise use. In addition, it provides content licensing, as well as allows third-party data providers to update and manage business listing information on behalf of businesses. Further, the company offers its products directly through its sales force; indirectly through partners; and online through its website and business app, as well as non-advertising partner arrangements. It has partnership with Grubhub for providing consumers with a service to place food orders for pickup and delivery. The company was incorporated in 2004 and is based in San Francisco, California.

About ZoomInfo Technologies

ZoomInfo Technologies Inc., through its subsidiaries, provides go-to-market intelligence and engagement platform for sales and marketing teams in the United States and internationally. The company’s cloud-based platform provides information on organizations and professionals to help users identify target customers and decision makers, obtain continually updated predictive lead and company scoring, monitor buying signals and other attributes of target companies, craft messages, engage through automated sales tools, and track progress through the deal cycle. It serves enterprises, mid-market companies, and down to small businesses that operate in various industry verticals, including software, business services, manufacturing, telecommunications, financial services, media and internet, transportation, education, hospitality, and real estate. ZoomInfo Technologies Inc. was founded in 2007 and is headquartered in Vancouver, Washington.