Sumary of 3 Reasons Yeti Stock Could Have More Upside:
- 1. Accelerating growth Yeti has seen sales growth improve significantly since the first quarter of 2020. Sales improved 12% year over year before dipping to a 7% growth rate in the second quarter at the beginning of the pandemic.
- Most importantly, Yeti is very profitable thanks to its premium pricing, product cost improvements, and a growing direct-to-consumer (DTC) channel.
- That lifted adjusted earnings per share (EPS) by 76% to $1.87. That performance continued in the first quarter with adjusted EPS tripling year over year to reach $0.38, compared to $0.11 in 2020. 2. Online growth The higher-margin DTC channel made up 51% of total sales in Q1, up from 46% in the same quarter last year.
- “We believe that these efforts will not only foster a deep connection between our brand and consumers both digitally and, as the world reopens more fully, in a direct, personal way, but will also support our plans for long-term, sustainable growth,” CEO Matt Reintjes said in the earnings report.
- 3. International growth Yeti recently achieved the milestone of crossing $1 billion in trailing-12-month sales.
- Management has identified meaningful growth opportunities to meet consumer needs in these markets with its premium products.
- It currently sits close to new highs and trades at a high price-to-earnings (P/E) ratio of 38.6 times forward earnings estimates for 2021. Still, Yeti generates a high return on capital (an alternative calculation of return on equity) of 49% and has tremendous opportunities to continue deploying capital to expand globally.
- Typically, companies that have plenty of opportunities to keep investing for growth at high returns are worth a big premium versus the average stock.