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Bull of the Day: YETI Holdings (YETI)

Madeleine Johnson

YETI Holdings (YETI) designs, markets, and distributes outdoor and recreational products under the popular YETI brand primarily in the U.S. The company’s products are designed mostly for outdoor activities, like hunting, fishing, camping, barbecue, and many others. YETI is based in Austin, Texas.

YETI is known in the leisure-recreational market for selling very expensive coolers, some as expensive as $1,300. But similar to Canada Goose (GOOS), it’s been able to create a brand that represents “high-quality” to consumers, as well as one that can justify those high-ticket prices.

YETI IPO’ed back in October, but had a shaky start during its first few months of trading. However, the company’s recent strong fourth-quarter results have renewed optimism in the company among investors.

Better-Than-Expected Q4 Results

Earnings of 38 cents beat the Street consensus of 35 cents per share, and adjusted net income rose a whopping 379% to $32 million.

Sales climbed 19% year-over-year to $241.2 million, which beat our consensus estimate.

YETI’s core product portfolio performed well, too, with its Drinkware segment revenues up 24% from the prior-year period.

Direct-to-consumer (DTC) soared 45% year-over-year.

Additionally, YETI was able to pay down its debt load by $152 million across 2018, which brought its total debt load to about $332 million at the end of last year.

YETI is On the Rise

YETI Holdings, Inc. Price and Consensus

YETI Holdings, Inc. Price and Consensus | YETI Holdings, Inc. Quote

Year-to-date, shares of YETI are up over 95% compared to the S&P 500’s gain of almost 14%.

Estimates have been rising lately too, pushing the stocks towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, the company’s earnings are expected to grow about 12% year-over-year. Six analysts have revised their estimates upwards in the past 60 days, and the Zacks Consensus Estimate has moved six cents higher from $0.96 to $1.02 during the same time frame.

2020 looks pretty strong too, and earnings are expected to grow over 20%; next year’s consensus estimate sits at $1.23 per share, with five upward revisions in the last 60 days.

Looking Ahead

For 2019, YETI expects full-year sales to be up between 11.5% and 13% year-over-year. Adjusted EPS is projected to be up between 18% and 24% year-over-year.

YETI definitely has a lot of untapped potential, especially if it expands its DTC channel and continues to introduce more products that resonate with its core customer (just like it did with drinkware and soft coolers).

If you’re an investor looking for an outdoor brands stock to add to your portfolio, make sure to keep YETI on your shortlist.

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