Buffett Brain · Research note
Score updated 21 Oct 2026 · analysis from 25 May 2026
YELP· Communication Services
Yelp
Yelp's strong gross margins of 88.9% and significant free cash flow yield of 26.96% are offset by concerns over its operating margins and management quality.
Buffett fit
Partial fit
Owner
49
Durability
92
Management
57
Price
45
Score updated 21 Oct 2026 · analysis from 25 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Communication Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Yelp outright, I'd focus on leveraging its high and strong growth of 30% YoY to reinvest in product enhancements.
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Yelp has shown durability with a 5-year EPS CAGR of 44.33% and profitability in all five years.
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Yelp's management has effectively reduced its share count by 3.89% over the last five years, indicating a commitment to returning value to shareholders through , with a buyback yield of 20.13%.
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With an earnings yield of 10.84% and an yield of 26.96%, the current price of $22.39 appears reasonable.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 88.9% ranks in the top quintile for the Communication Services sector.
- 2 of $323.02M indicates strong cash generation capability.
- 35-year EPS CAGR of 44.33% shows rapid growth in earnings.
- 4Share count has decreased by 3.89% over the last five years, reflecting a commitment to .
Concerns
5- 1 of 12.8% is below the sector's top-quintile cutoff of 15.3%.
- 2Net margin of 9.5% is below the sector's top-quintile cutoff of 10.6%.
- 3Management quality score of 57 indicates potential concerns about effectiveness.
- 4High market cap relative to retained earnings (3.02) raises questions about sustainable growth.
Price history
$20.28-47.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Yelp connects consumers with local businesses through its platform, generating revenue from advertising products, including cost-per-click ads. With TTM revenue of $1.46B and net income of $145.6M, the business model is robust. The of $323.02M indicates strong cash generation, supporting its operations and growth.
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Communication Services
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