Analyzing Yelp (NYSE:YELP) and Similarweb (NYSE:SMWB)

Yelp (NYSE:YELP) and Similarweb (NYSE:SMWB) are both small-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Yelp	9.47%	20.19%	14.45%
Similarweb	-10.38%	-48.57%	-4.45%

Valuation & Earnings

This table compares Yelp and Similarweb”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	0.88	$145.60 million	$2.19	10.74
Similarweb	$282.60 million	1.35	-$32.94 million	($0.35)	-12.44

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

Institutional & Insider Ownership

90.1% of Yelp shares are owned by institutional investors. Comparatively, 57.6% of Similarweb shares are owned by institutional investors. 8.3% of Yelp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yelp	3	4	1	0	1.75
Similarweb	1	7	3	0	2.18

Yelp presently has a consensus price target of $27.88, indicating a potential upside of 18.49%. Similarweb has a consensus price target of $7.07, indicating a potential upside of 62.37%. Given Similarweb’s stronger consensus rating and higher probable upside, analysts clearly believe Similarweb is more favorable than Yelp.

Volatility & Risk

Yelp has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Similarweb has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Summary

Yelp beats Similarweb on 9 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 Similarweb

Similarweb Ltd. provides cloud-based digital intelligence solutions in the United States, Europe, the Asia Pacific, the United Kingdom, Israel, and internationally. The company offers digital research intelligence solutions for its customers to benchmark performance against competitors and market leaders, analyze trends in the market, conduct deeper research into specific companies, and analyze audience behavior; and digital marketing intelligence solutions for its customers to understand their competitors' online acquisition strategies in each marketing channel, and optimize their own strategies. It also provides sales intelligence solutions for its customers to access relevant buying signals and digital insights of their customers to generate leads quickly; and shopper intelligence solutions for its customers to analyze a view of their customers' digital journeys, monitor consumer demand, increase brand visibility in the search process, and optimize category and product level conversion in the purchase process. In addition, the company offers investor intelligence solutions for its customers to access an end-to-end view of market, sector, and company performance to ideate and monitor investment opportunities; forecast market performance; and perform due diligence. Further, it provides data-as-a-service and advisory services. The company serves retail, consumer packaged goods, consumer finance, consultancies, marketing and advertising agencies, media and publishers, business-to-business software, payment processors, travel, and institutional investors. Similarweb Ltd. was incorporated in 2009 and is headquartered in Givatayim, Israel.