YETI Holdings (YETI): A Hidden Gem in the Stock Market? A Comprehensive Look at Its Valuation
YETI Holdings Inc (NYSE:YETI) recently recorded a daily gain of 4.74% and a 3-month gain of 3.57%. With an Earnings Per Share (EPS) (EPS) of 0.76, the stock appears significantly undervalued. This article aims to provide an in-depth analysis of YETI Holdings Inc's valuation, offering valuable insights to potential investors. Stay with us as we delve into the financials of this company.
Company Introduction
YETI Holdings Inc is a renowned designer, marketer, and distributor of premium products for the outdoor and recreation market. The company's products, sold under the YETI brand, include coolers and equipment, drinkware, and other accessories. The current stock price stands at $42.9, while the GF Value, an estimation of fair value, is $76.07. This comparison suggests that the stock might be significantly undervalued.
Understanding the GF Value
The GF Value is a unique measure of a stock's current intrinsic value. It is calculated based on historical multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. The GF Value Line on the summary page provides an overview of the fair value that the stock should ideally trade at.
According to the GF Value, YETI Holdings (NYSE:YETI) appears to be significantly undervalued. This conclusion is based on historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. The current price of $42.9 per share suggests that YETI Holdings stock is significantly undervalued. As a result, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength of YETI Holdings
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. YETI Holdings has a cash-to-debt ratio of 1.43, which ranks better than 65.07% of 813 companies in the Travel & Leisure industry. Based on this, GuruFocus ranks YETI Holdings's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. YETI Holdings has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $1.60 billion and Earnings Per Share (EPS) of $0.76. Its operating margin is 5.68%, which ranks worse than 53.69% of 814 companies in the Travel & Leisure industry. Overall, the profitability of YETI Holdings is ranked 9 out of 10, indicating strong profitability.
One of the most important factors in the valuation of a company is growth. The average annual revenue growth of YETI Holdings is 20%, which ranks better than 88.55% of 760 companies in the Travel & Leisure industry. The 3-year average EBITDA growth is 10.4%, which ranks better than 58.11% of 604 companies in the Travel & Leisure industry.
ROIC vs WACC
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, YETI Holdings's return on invested capital is 11.4, and its cost of capital is 16.5.
Conclusion
In summary, the stock of YETI Holdings (NYSE:YETI) is estimated to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 58.11% of 604 companies in the Travel & Leisure industry. To learn more about YETI Holdings stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
