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Top-Line Momentum to Aid YETI Holdings (YETI) in Q1 Earnings

Zacks Equity Research

YETI Holdings, Inc. YETI is scheduled to report first-quarter 2019 results on May 2, before the opening bell.

The company’s endeavors to expand the customer base by introducing new product categories; enhancing direct customer and corporate sales; and international expansion are likely to have bolstered the top-line performance in the to-be-reported quarter.Meanwhile, despite increased marketing investments, YETI Holdings’ earnings in the first quarter are likely to have gained from higher margins.

The company’s earnings in the past two quarters have beaten the Zacks Consensus Estimate.

Let us find out how YETI Holdings’ first-quarter results will shape up.

Top-Line Scenario Encourages

We believe that YETI Holdings’ revenues in the first quarter have gained, owing to the continued improvement across revenue channels. Its Wholesale segment, which grew 4% in the fourth quarter, is likely to have kept its momentum alive in the first quarter as well. Also, the direct-to-consumer business continues to be the major growth driver for the company.

Product launches as well as digital advertising also bolstered top-line growth over the last two reported quarters. These are likely to have driven revenues in the to-be-reported quarter as well.

The Zacks Consensus Estimate for YETI Holdings’ revenues in the first quarter is pegged at $142.6 million.

How Will Earnings Shape Up?

The consensus estimate for YETI Holdings’ earnings in the first quarter is pegged at 3 cents. We believe that its high margins from continued cost improvements across product categories are likely to have aided earnings in the first quarter.

However, the company has also been recurring high expenses from marketing initiatives, which in turn may have curtailed earnings growth in the to-be-reported quarter.

What Does the Zacks Model Unveil?

Our proven model does show that YETI Holdings is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

YETI Holdings has an Earnings ESP of +16.67% and a Zacks Rank #1, which make surprise prediction easier.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

YETI Holdings, Inc. Price and EPS Surprise

 

YETI Holdings, Inc. Price and EPS Surprise | YETI Holdings, Inc. Quote

Other Stocks With Favorable Combinations

Here are a few other stocks from the Consumer Discretionary sector that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat in the first quarter:

JAKKS Pacific JAKK has an Earnings ESP of +17.86% and it currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wynn Resorts WYNN has an Earnings ESP of +2.98% and a Zacks Rank #3 at present.

Norwegian Cruise NCLH currently has an Earnings ESP of +0.53% and a Zacks Rank #3.

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