Reviewing ZipRecruiter (NYSE:ZIP) & Yelp (NYSE:YELP)

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

Profitability

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

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ZipRecruiter and Yelp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ZipRecruiter	0	4	0	0	2.00
Yelp	3	3	1	0	1.71

ZipRecruiter currently has a consensus price target of $4.17, indicating a potential downside of 3.66%. Yelp has a consensus price target of $25.57, indicating a potential upside of 38.93%. Given Yelp’s higher probable upside, analysts clearly believe Yelp is more favorable than ZipRecruiter.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ZipRecruiter	$452.26 million	0.79	-$32.99 million	$0.35	12.36
Yelp	$1.47 billion	0.68	$145.60 million	$2.09	8.81

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

70.6% of ZipRecruiter shares are held by institutional investors. Comparatively, 90.1% of Yelp shares are held by institutional investors. 19.9% of ZipRecruiter shares are held by company insiders. Comparatively, 8.3% of Yelp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

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

Summary

Yelp beats ZipRecruiter on 9 of the 14 factors compared between the two stocks.

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.

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.