Before the Call: Yahoo! in the Middle

Three months have passed since we first examined investor sentiment on exclamatory Internet titan and Stock Advisor recommendation Yahoo! (NASDAQ:YHOO) in this column. In the interim, the company lost its CEO to a self-inflicted wound, but the change at the top isn't causing investors to think much better of the company. Perhaps tomorrow's earnings report will do the trick?

After the news comes out, we'll have time aplenty to dissect it. But in these few hours before we begin obsessing over Yahoo's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 60,000 investors for their views on more than 4,000 companies, Yahoo! among them. Here's what Fools have to say about it.

Up or down?
More than 3,300 investors have submitted ratings on Yahoo!, making it the 11th-most rated stock in all of CAPS-land. Their verdict: 87% expect Yahoo! to outperform the market, but the better the investor, the worse the foreboding. Only 79% of All-Star players like the Internet powerhouse, holding it to a mere two stars out of a possible five on CAPS.

Among its CAPS peers, Yahoo! squats squarely in the middle of the pack -- but hey, at least it's tied with Google (NASDAQ:GOOG):

Wall Street vs. Main Street
When you ask the investors who supposedly know the most about investing -- Wall Street analysts -- they favor Yahoo! by much greater margins. Out of 14 analysts polled, a baker's dozen still think Yahoo! will outperform the market. Unfortunately, they continue to find their optimism misplaced. Over the past 52 weeks, the stock has underperformed the S&P 500 by 28 points, continuing the trend we highlighted back in April.

Bull pitch
CAPS' top-rated pitch in favor of Yahoo! avoids the firm's numbers -- the worsening free cash flow and declining revenues -- focusing instead on the big picture: "Yahoo has an incredibly well integrated site that leverages one's information to provide information and services in return. Now that Panama is done, not only will search continue to improve, but much infrastructure is in place to enhance existing businesses." Overall, this investor is enamored with Yahoo!'s "many strong businesses," music and mobile search in particular, and expects to see the firm capitalize on these strengths going forward.

Bear pitch
Bears sum up their short thesis in one word: Google. They don't think Yahoo! can compete with the Internet superpower, arguing that Yahoo!'s trailing price-to-earnings ratio of 52 is just too high a price to pay for a falling star. When you notice that Google actually sports a lower P/E than Yahoo!'s (did I just use the words "lower P/E" and "Google" in the same sentence?), it's hard to argue with that logic.

Who said that?
To learn the identities of the wise Fools who penned these words, to examine their records, to see whether they know whereof they speak, and to explore the plethora of additional financial data we've put together on the company, just click here.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 701 out of more than 60,000 raters. NetEase, The Knot, and Baidu.com are Rule Breakers newsletter recommendations. The Fool has a disclosure policy.