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

Profitability

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

Net Margins Return on Equity Return on Assets
CarGurus N/A N/A N/A
Yelp 2.31% 2.20% 2.00%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CarGurus N/A N/A N/A ($0.21) -145.14
Yelp $713.07 million 5.03 -$4.67 million $0.23 188.22

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

Analyst Recommendations

This is a summary of recent recommendations for CarGurus and Yelp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CarGurus 0 4 1 0 2.20
Yelp 1 15 19 0 2.51

CarGurus currently has a consensus target price of $29.50, suggesting a potential downside of 3.22%. Yelp has a consensus target price of $43.88, suggesting a potential upside of 1.37%. Given Yelp’s stronger consensus rating and higher possible upside, analysts plainly believe Yelp is more favorable than CarGurus.

Institutional and Insider Ownership

85.7% of Yelp shares are owned by institutional investors. 10.1% of Yelp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Yelp beats CarGurus on 11 of the 11 factors compared between the two stocks.

CarGurus Company Profile

CarGurus, Inc. is an online automotive marketplace connecting buyers and sellers of new and used cars. Using proprietary technology, search algorithms, and data analytics. The Company’s marketplace empowers users with unbiased third-party validation on pricing and dealer reputation as well as other information that aids them in finding Great Deals from Great Dealers. In addition to the United States, the Company operates online marketplaces in Canada, the United Kingdom, and Germany. The Company’s products include Consumer Marketplace, Dealer Marketplace, Dealer Dashboard, Dealer Advertising and Customer Acquisition Products, Auto Manufacturer and Other Advertiser Products.

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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