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Yext: Deep Value

Mar. 05, 2020 6:20 PM ETYext, Inc. (YEXT)6 Comments


  • Yext returns back to beating consensus targets.
  • The stock trades at a lower P/S multiple than Alphabet despite targeted growth rates of nearly double the search giant.
  • Yext should return to a multiple of 6x FY22 sales estimates of $485 million, or $25.
  • This idea was discussed in more depth with members of my private investing community, DIY Value Investing. Get started today »

After another quarter of 28%+ growth, Yext (NYSE:YEXT) is limping along with a 6% gain in mid-day trading. The stock trades near the multi-year lows despite a history of strong growth around the 30% range. My investment thesis remains very bullish on investors eventually catching onto this bullish corporate story.

Yext logo

Image Source: Yext website

Moving Beyond Google

The biggest fear in the stock for the digital knowledge management company is the reliance on consumers using sites such as Google to obtain information about a company via Yext databases. The process still flowed through 3rd-party sites that could eventually find a solution to block Yext out of the process.

The recent product release of Answers helps to solve this problem. Consumers are now able to get corporate answers directly from a company's website to prevent potential customers from bouncing right back to Google to search for information on the brand that they couldn't find on their own website.

Per CEO Howard Lerman on the Q4 earnings call, Answers is off to a great start after launching at the end of Q3:

Now some people have said, "No one uses site search." But the number of searches we're seeing come through our platform is stunning. With only a limited set of early clients, Answers customers are already achieving an annualized run rate of more than 11 million searches per year. And remember, these queries are all commercial. It's a user or a consumer asking a business a question and getting a correct answer.

A new telecom customer just launched with an amazing pace of queries for Answers on a pace of over 5 million annual searches removed from the Google stream:

A large Fortune 500 telecommunications company was one of the latest customers live on Yext Answers. And on a Sunday, they saw more

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This article was written by

Stone Fox Capital profile picture

Stone Fox Capital (aka Mark Holder) is a CPA with degrees in Accounting and Finance. He is also Series 65 licensed and has 30 years of investing experience, including 10 years as a portfolio manager.

Mark leads the investing group Out Fox The Street where he shares stock picks and deep research to help readers uncover potential multibaggers while managing portfolio risk via diversification. Features include various model portfolios, stock picks with identifiable catalysts, daily updates, real-time alerts, and access to community chat and direct chat with Mark for questions. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in YEXT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

El Financeiro profile picture
Thx.. good article. Long YEXT. In the age of misinformation and companies controlling the info on their brands, this has potential.
Boboboomer profile picture
The deeper you go the more problems you’ll find with Yext. They are irrelevant in the majority of internet users repertoire and the B2B “maps seo” junk proves how delusional this company is. Trying so hard to be anything at this point to make a buck or make it look like they are!
BeepBeepImAJeep3 profile picture
There's another peach by the "Bag" Holder. Nice comp of GOOGL. LOL.

I am tempted to short this just knowing you're long. Will add it to my short list, thanks for the tip.
I hope you're right
Kagami427 profile picture
I love Yext. Long.
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