Today’s Research Reports on Stocks to Watch: Roku and Yelp

Roku and Yelp were two of the biggest winners in the market in Thursday trading, both soaring after solid second quarter financial results.

RDI Initiates Coverage on:

Roku, Inc.

Yelp Inc.

Roku, Inc. shares closed up 21.31% on about 39 million shares traded yesterday. The streaming content device maker exploded after reporting an upbeat second quarter and outlook for the year. For the quarter, Roku reported a profit of $526 million, compared with a loss of $15.5 million a year ago. Excluding items, Roku broke even on a per share basis, while analyst estimates called for a 15-cent loss. Total net revenue rose 57.4 percent to $156.8 million coming ahead of the $141.5 million expected by Wall Street. Roku raised its full-year revenue forecast to $710 million, ahead of estimates of $698 million. The company also revealed that its subscriber addition rose 46 percent in the quarter and streaming hours increased 57 percent to 5.5 billion hours. "We don’t think the new platforms like web will have any big impact in the short term, but in the long term it’s going to expand the reach and help with the overall performance of the business," Chief Executive Officer Anthony Wood told Reuters. Chief Financial Officer Steve Louden told TheSteet, "We think there is a massive opportunity long-term." He added, "Not to talk about Amazon’s trajectory, but certainly we can slow down investment in the business and that would pop some incremental margins to the bottom line. When eventually we gain more scale and when the investment in the business relatively declines, there is a lot of leverage in this business long-term."

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Yelp Inc. shares exploded on Thursday, closing the day up 26.65% on nearly 26.3 million shares traded. The stock soared to a new high of $49.77 after the online consumer review site posted second quarter financial results that beat expectations. Yelp also lifted its revenue forecast for the full year, citing the strengthening of its digital ad revenue base and an increase in business spending in the U.S. economy. For the quarter, Yelp reported revenue of $235 million. This was a jump of 12% compared to a year ago and was ahead of the $232 million that analysts had been expecting. Profit of $10.7 million, or 12 cents a share, was a boost from $7.9 million, or 9 cents a share, in the year ago quarter. Analysts were expecting only a penny a share. Chief Operating Officer Joseph Nachman remarked, "We have this really unique opportunity that we haven’t necessarily had in the past that you automatically have that business owner engaged from the moment they start out with Yelp. Whereas in the past, they may have had other contracts. So it was back and forth and you had to kind of get them onboarded into the business owner app." The company upped its guidance for 2018 revenue from $943 million to $967 million to $952 million to $967 million.

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Our Actionable Research on Roku, Inc. (NASDAQ: ROKU) and Yelp Inc. (NYSE: YELP) can be downloaded free of charge at Research Driven Investing.

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