YETI Holdings, Inc. (YETI) in Austin, Tex., designs, markets, retails, and distributes products for the outdoor and recreation market. The company has completed a $100 million share repurchase and raised its adjusted EPS guidance range to $2.86 – $2.91 from $2.82 – $2.86 and expects its sales to be up 18% to 20%. However, its trailing-12-month levered FCF margin is negative versus a 3.60% industry average.

The stock has declined 24.9% in price over the past three months and 52.3% over the past nine months to close yesterday’s trading session at $47.76. In addition, it is currently trading 56.1% below its 52-week high of $108.82, which it hit on Nov.5, 2021. Also, it is currently trading below its 50-day and 200-day moving averages of $51.56 and $75.34, respectively, indicating a downtrend. So, YETI’s near-term prospects look uncertain.

Here is what could influence YETI’s performance in the upcoming months:

Favorable Analyst Estimates

For the quarter ending Sept. 30, 2022, analysts expect YETI’s EPS and revenue to grow 23.4% and 19.6%, respectively, year-over-year to $0.79 and $433.76 million. In addition, its EPS is expected to grow at 13.9% per annum over the next five years. Furthermore, Wall Street analysts expect the stock to hit $71.92 in the near term, indicating a potential 50.6% upside.

Top-line Growth Does not Translate into Bottom-line Improvement

YETI’s total revenue has increased 19% year-over-year to $293.60 million for its fiscal first quarter, ended April 2, 2022. The company’s adjusted operating income declined 13% year-over-year to $38 million, while its adjusted net income decreased 12% year-over-year to $29.20 million. Also, its adjusted EPS came in at $0.33, down 13% year-over-year.

Stretched Valuation

In terms of forward P/S, YETI’s 2.44x is 161.1% higher than the 0.94x industry average. Its 5.87x forward P/B is 135.9% higher than the 2.49x industry average. Furthermore, the stock’s 2.36x and 1.17x forward EV/S and P/CF are higher than the 13.33x and 9.24x industry averages.

POWR Ratings Do not Indicate Enough Upside

YETI has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. YETI has a D grade for Value, which is in sync with its higher-than-industry valuation ratios.

The stock has a D grade for Stability, consistent with its beta of 2.57.

YETI is ranked #46 out of 61 stocks in the C-rated Consumer Goods industry. Click here to access all of YETI’s ratings.

Bottom Line

YETI stock could continue retreating in the near term on concerns over high inflation and supply chain disruption. So, the stock looks overvalued at the current price level, and we think it could be wise to wait for a better entry point.

How Does YETI Holdings (YETI) Stack Up Against its Peers?

While YETI has an overall POWR Rating of C, one might want to consider investing in the following Consumer Goods stocks with an A (Strong Buy) or B (Buy) rating: Mannatech, Incorporated (MTEX), Société BIC SA (BICEY), and Ennis, Inc. (EBF).

YETI shares were trading at $46.65 per share on Friday morning, down $1.11 (-2.32%). Year-to-date, YETI has declined -43.68%, versus a -13.40% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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