Financial Review: ZipRecruiter (NYSE:ZIP) and Yelp (NYSE:YELP)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Yelp	8.59%	19.52%	13.44%
ZipRecruiter	6.20%	N/A	-3.73%

Earnings & Valuation

This table compares Yelp and ZipRecruiter”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yelp	$1.46 billion	0.71	$145.60 million	$2.09	9.13
ZipRecruiter	$448.95 million	0.77	-$32.99 million	$0.35	11.97

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

Insider & Institutional Ownership

90.1% of Yelp shares are owned by institutional investors. Comparatively, 70.6% of ZipRecruiter shares are owned by institutional investors. 8.3% of Yelp shares are owned by insiders. Comparatively, 19.9% of ZipRecruiter shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Yelp and ZipRecruiter, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yelp	3	2	1	1	2.00
ZipRecruiter	0	4	0	0	2.00

Yelp currently has a consensus target price of $25.57, indicating a potential upside of 34.02%. ZipRecruiter has a consensus target price of $4.17, indicating a potential downside of 0.56%. Given Yelp’s higher probable upside, research analysts plainly believe Yelp is more favorable than ZipRecruiter.

Volatility and Risk

Yelp has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, ZipRecruiter has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500.

Summary

Yelp beats ZipRecruiter on 10 of the 14 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 ZipRecruiter

ZipRecruiter, Inc. operates an online employment marketplace that connects job seekers and employers. Its platform provides various solutions, such as job posting, online interviews, job alerts, match scores, and application updates. The company was incorporated in 2010 and is based in Santa Monica, California.