Categories Analysis, Earnings, Other Industries

Here’s what makes Yeti Holdings’ (YETI) stock a great pick this year

Yeti Holdings (NYSE: YETI), a market leader in outdoor coolers and drinkware, achieved steady growth over the years on the back of innovation and strength of the brand. Having raised its market cap to around $2.5 billion, after going public more than a year ago, Yeti remains unchallenged despite new players entering the recreational products market.

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Currently, Yeti is fairly valued and has a strong potential for future growth – something most investors would find attractive. Already in the first quarter of fiscal 2020, the company is focused on meeting the growth targets and predicts double-digit sales and earnings growth for the full year, which is in line with the market’s expectations.

Related: Baidu (BIDU) Q4 earnings top estimates

The bullish outlook suggests the stock might soon shift to the growth mode, creating value for shareholders. The recent pullback can be considered as a buying opportunity, given the relatively low price and the company’s strong fundamentals. Analysts overwhelmingly recommend buying Yeti, with a highly optimistic target price of about $42, which was revised up multiple times in recent weeks.

Stock Movement

After making a positive start to the year, the shares retreated and slipped to a three-month low this week, losing about 16% year-to-date. The value of the stock, which experienced high volatility since the IPO, more than doubled in 2019. 

Catalysts

A closer look at last year’s performance shows growth was spurred by multiple factors, with the main catalysts being strong customer addition, product innovation and global expansion – plans are afoot to launch regional e-commerce platforms to drive online traffic, starting with Europe. Yeti is probably poised for a stronger growth this year, leveraging these positive elements combined with the company’s aggressive direct-to-customer initiatives.

Q4 Outcome

Yeti’s top-line outperformed Wall Street’s predictions consistently last year. In the final three months of the year, sales increased 23% annually, driving up adjusted earnings by a third to $0.48 per share amid improved omni-channel capabilities and solid margin growth. The fourth-quarter results also topped the Street view. Over the past decade, the rate of expansion has been phenomenal, which has left rivals trailing.

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