Yelp (NYSE:YELP – Get Free Report) and Rakuten (OTCMKTS:RKUNY – Get Free Report) are both communication services companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Yelp and Rakuten, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Yelp | 3 | 3 | 1 | 0 | 1.71 |
| Rakuten | 0 | 1 | 0 | 0 | 2.00 |
Yelp currently has a consensus target price of $26.57, indicating a potential upside of 42.24%. Given Yelp’s higher probable upside, analysts plainly believe Yelp is more favorable than Rakuten.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Yelp | 8.59% | 19.52% | 13.44% |
| Rakuten | -2.48% | -5.09% | -0.22% |
Valuation and Earnings
This table compares Yelp and Rakuten”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Yelp | $1.47 billion | 0.69 | $145.60 million | $2.09 | 8.94 |
| Rakuten | $16.70 billion | 0.54 | -$1.19 billion | ($0.19) | -21.79 |
Yelp has higher earnings, but lower revenue than Rakuten. Rakuten is trading at a lower price-to-earnings ratio than Yelp, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Yelp has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, Rakuten has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.
Institutional & Insider Ownership
90.1% of Yelp shares are owned by institutional investors. 8.3% of Yelp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Yelp beats Rakuten on 11 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 Rakuten
Rakuten Group, Inc. provides services in e-commerce, fintech, digital content, and communications to various users in Japan and internationally. The company operates through three segments: Internet Services, FinTech, and Mobile. The Internet Services segment provides range of e-commerce sites, such as Rakuten Ichiba, an Internet shopping mall, online cash-back sites, travel booking sites, portal sites, and digital content sites. It also offers messaging services and sells advertising; and manages professional sport teams. The FinTech segment offers financial services over the internet related to banking and securities, credit cards, life insurance, general insurance, electronic payment business, crypto asset (virtual currency) spot transaction, etc. The Mobile segment provides communication services and technology, electricity supply, and digital content site services. The company was formerly known as Rakuten, Inc. and changed its name to Rakuten Group, Inc. in April 2021. Rakuten Group, Inc. was incorporated in 1997 and is headquartered in Setagaya, Japan.
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