Reviewing Yirendai (YRD) and Yelp (YELP)

Yirendai (NYSE: YRD) and Yelp (NYSE:YELP) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Valuation and Earnings

This table compares Yirendai and Yelp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yirendai $466.37 million 4.78 $160.79 million $3.15 11.84
Yelp $713.07 million 5.15 -$4.67 million $0.22 201.28

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

Insider and Institutional Ownership

10.0% of Yirendai shares are held by institutional investors. Comparatively, 86.1% of Yelp shares are held by institutional investors. 10.1% of Yelp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Yirendai and Yelp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yirendai 0 0 3 0 3.00
Yelp 1 15 19 0 2.51

Yirendai presently has a consensus price target of $55.00, suggesting a potential upside of 47.49%. Yelp has a consensus price target of $43.98, suggesting a potential downside of 0.68%. Given Yirendai’s stronger consensus rating and higher possible upside, research analysts clearly believe Yirendai is more favorable than Yelp.

Dividends

Yirendai pays an annual dividend of $1.48 per share and has a dividend yield of 4.0%. Yelp does not pay a dividend. Yirendai pays out 47.0% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Yirendai 27.09% 70.10% 29.13%
Yelp 2.31% 2.20% 2.00%

Risk and Volatility

Yirendai has a beta of 6.14, suggesting that its share price is 514% more volatile than the S&P 500. Comparatively, Yelp has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Summary

Yirendai beats Yelp on 9 of the 16 factors compared between the two stocks.

Yirendai Company Profile

Yirendai Ltd. is engaged in online consumer finance marketplace business in China. The Company conducts its business in China, through Yi Ren Heng Ye Technology Development (Beijing) Co., Ltd. (Heng Ye) and its consolidated variable interest entity, Heng Cheng Technology Development (Beijing) Co., Ltd. (Heng Cheng). Heng Cheng operates its Website, www.yirendai.com, and has an Internet content provider (ICP) license as an Internet information provider. Its online marketplace facilitates standard loan products, express loan products and vertical loan products to borrowers. Uses for these loan products include home remodels, durable good purchases, travel and continuing education. Its online marketplace provides investors with various investing tools, such as automated investing tool and self-directed investing tool. It maintains a secondary loan market on its marketplace where investors can transfer the loans they hold prior to maturity at the fair value of the remaining loans.

Yelp Company Profile

Yelp Inc. (Yelp) connects people with local businesses by bringing ‘word of mouth’ online and providing a platform for businesses and consumers to engage and transact. The Company offers local business review sites. Yelp provides a platform for consumers to share their everyday local business experiences with other consumers by posting reviews, tips, photos and videos, and to engage directly with businesses, through reviews, its Request-A-Quote and Message the Business features, and by completing transactions on the Yelp Platform. Yelp also provides businesses of all sizes with a range of free and paid services that help them engage with consumers. The Yelp Platform allows consumers to transact with local businesses directly on Yelp through Yelp Reservations, its online reservations product, and integrations with partners ranging from Shoptiques.com (boutique shopping) to GolfNow (tee time booking) to BloomNation (flower ordering).

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