Analyzing Nextdoor (NYSE:NXDR) & Yelp (NYSE:YELP)

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

Insider and Institutional Ownership

90.1% of Yelp shares are held by institutional investors. Comparatively, 35.7% of Nextdoor shares are held by institutional investors. 8.3% of Yelp shares are held by company insiders. Comparatively, 33.5% of Nextdoor shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations for Yelp and Nextdoor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yelp	2	4	1	0	1.86
Nextdoor	1	2	1	0	2.00

Yelp presently has a consensus target price of $27.57, indicating a potential upside of 34.82%. Nextdoor has a consensus target price of $2.80, indicating a potential upside of 29.33%. Given Yelp’s higher probable upside, research analysts clearly believe Yelp is more favorable than Nextdoor.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Yelp	8.59%	19.52%	13.44%
Nextdoor	-11.08%	-6.16%	-5.45%

Valuation and Earnings

This table compares Yelp and Nextdoor”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yelp	$1.46 billion	0.76	$145.60 million	$2.09	9.79
Nextdoor	$274.60 million	3.01	-$54.20 million	($0.08)	-27.06

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

Volatility & Risk

Yelp has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500. Comparatively, Nextdoor has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.

Summary

Yelp beats Nextdoor on 9 of the 13 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 Nextdoor

Nextdoor Holdings, Inc. operates as the neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. It enables small and mid-sized businesses, large brands, public agencies, and nonprofits to receive information, give and get help, and build connections. The company is headquartered in San Francisco, California.