Core Insights - The article emphasizes the importance of long-term wealth creation through value growth investing, value investing, and dividend investing [1] - The author aims to analyze companies from a fundamental value investing perspective, seeking to identify great companies at fair prices [1] Group 1 - The author has over 7 years of investing experience, focusing on long-term strategies [1] - The educational background is in Biology, specifically molecular cell biology, which informs the author's analytical approach to investing [1] - The intention is to write articles based on personal research and experiences related to building long-term wealth [1] Group 2 - The author has a beneficial long position in YETI shares, indicating a personal investment interest [2] - The article reflects the author's own opinions and is not influenced by compensation from any company mentioned [2] - There is no business relationship with any company whose stock is discussed in the article [2]

Core Insights - Value investing remains a preferred strategy for identifying strong stocks across various market conditions [2] - The Zacks Rank system emphasizes earnings estimates and revisions to identify winning stocks [1] Company Analysis: YETI - YETI currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - The stock's P/E ratio is 9.76, significantly lower than the industry average of 26.22, suggesting it may be undervalued [4] - YETI's P/B ratio stands at 3.26, compared to the industry's average of 7.60, further indicating attractive valuation [5] - The P/CF ratio for YETI is 11.01, which is also lower than the industry average of 23.75, reinforcing the notion of undervaluation [6] - Overall, YETI's key metrics suggest it is likely undervalued, supported by a strong earnings outlook [7]

Company Overview - Yeti Holdings shares increased by 13.9% to close at $30.90, following a significant trading volume, contrasting with a 20.1% loss over the past four weeks [1] - The company is expected to report quarterly earnings of $0.28 per share, reflecting a year-over-year decline of 17.7%, with revenues projected at $348.66 million, a 2.1% increase from the previous year [2] Earnings Estimates - The consensus EPS estimate for Yeti has remained unchanged over the last 30 days, indicating a lack of upward revisions which typically correlate with stock price movements [3] - Yeti currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Context - Yeti is part of the Zacks Leisure and Recreation Products industry, where OneWater Marine, another company in the same sector, saw its shares rise by 12% to $14.45, despite a 22.2% decline over the past month [3] - OneWater Marine's consensus EPS estimate has also remained unchanged at $0.34, representing a significant year-over-year decline of 49.3%, and it holds a Zacks Rank of 3 (Hold) [4]

Core Viewpoint - Engaged Capital has entered into a cooperation agreement with Yeti, aiming to enhance board governance and drive growth opportunities for the company, which has seen a slowdown in growth despite its strong brand and product offerings [2][9]. Company Overview - Yeti is a global designer, retailer, and distributor of premium outdoor products, known for high-quality insulated coolers and tumblers, with net sales in 2024 comprising 60% from Drinkware, 38% from Coolers & Equipment, and 2% from Other categories [3]. - The company employs a diverse omnichannel strategy, selling directly to consumers and through major outdoor retailers, focusing on innovative design and premium quality to maintain competitive advantage and consumer loyalty [3]. Financial Performance - Yeti had an initial public offering in October 2018 at $18 per share, achieving annual growth rates between 17% and 29% from 2018 to 2021, with a peak stock price of $108 in November 2021 [4]. - Growth has slowed to 3.98% in 2023, with the stock closing at $30.15, trading at eight-times EBITDA compared to over 20-times historically, indicating a perception of stability without growth prospects [4][6]. Growth Opportunities - There are three key opportunities for Yeti to create value: geographic expansion into Europe and Asia, product category diversification into luggage, bags, and camping equipment, and enhancing communication and execution strategies to boost investor confidence [4][5][6]. - The company has a strong cash position of $280 million and nearly $300 million in EBITDA, suggesting potential for significant stock buybacks, which could enhance shareholder value [6]. Board and Management Changes - The cooperation agreement includes increasing the board size to 10 directors and appointing Arne Arens and J. Magnus Welander, both with strong backgrounds in product and international expansion [2][7]. - The new directors are expected to help mitigate risks associated with market expansion and encourage more aggressive growth initiatives, addressing potential complacency in management [9]. Market Comparisons - Comparisons are drawn with SharkNinja, which successfully expanded its product lines and maintained strong investor relations, highlighting the need for Yeti to adopt similar strategies to enhance growth and market presence [5][8].

Company Overview - Yeti Holdings' shares increased by 5.7% to close at $34, following a notable trading volume, despite a 15.4% loss over the past four weeks [1] - The company announced the appointment of J. Magnus Welander and Arne Arens to its Board of Directors, effective March 24, 2025 [1] Earnings Expectations - Yeti is expected to report quarterly earnings of $0.28 per share, reflecting a year-over-year decline of 17.7%, with revenues projected at $348.66 million, a 2.1% increase from the previous year [2] - The consensus EPS estimate for Yeti has been revised down by 33.9% over the last 30 days, indicating a negative trend in earnings estimate revisions [3] Industry Context - Yeti operates within the Zacks Leisure and Recreation Products industry, where another company, OneWater Marine, closed 3.2% higher at $16.61, but has seen a return of -15.6% over the past month [3] - OneWater Marine's consensus EPS estimate remains unchanged at $0.36, representing a significant decline of 46.3% from the previous year [4]

Core Viewpoint - Yeti has experienced significant stock volatility since going public, with a notable decline of approximately 68% from its peak, despite strong growth in sales, operating income, and free cash flow since its IPO, indicating a potential investment opportunity at current low valuations [1][2]. Group 1: Customer Loyalty - Yeti has cultivated a loyal customer base, with 95% of customers recommending its products, reflecting strong brand resonance and effective word-of-mouth marketing [5]. - The brand's marketing strategy focuses on authentic content through over 200 brand ambassadors, connecting with various outdoor enthusiasts and fostering a cult-like following [3][4]. Group 2: Expansion Opportunities - Yeti's sales growth is projected at 9% for 2024, with a significant 30% increase in international revenue, indicating substantial growth potential as international sales currently account for only 18% of total revenue [6][7]. - The company is exploring adjacent markets and partnerships, such as sponsoring sports teams and expanding into cookware, which could further enhance its market reach [7][8]. Group 3: Financial Strength - Yeti maintains a strong financial position with a net cash balance of approximately $300 million and consistent free cash flow generation of over $200 million annually [9]. - The company has initiated a substantial stock buyback plan, increasing its buyback capacity to $450 million, representing 18% of its total valuation, which could benefit shareholders as the stock trades near all-time lows [10][11]. Group 4: Valuation - Yeti's current valuation metrics are at or near historical lows, trading at a price-to-earnings (P/E) ratio of 17 compared to the S&P 500's average of 29, suggesting it is undervalued relative to the broader market [12][13]. - The combination of a robust buyback program and low valuation presents a compelling investment case as the company continues to expand geographically and product-wise [14].

Core Insights - YETI Holdings demonstrated solid growth in Q4 and fiscal year 2024 despite competitive pressures and macroeconomic challenges [1] - The company is focusing on international expansion, product innovation, and strategic capital allocation to drive long-term growth [10] International Growth - Sales outside the U.S. increased by 27% in Q4 and 30% for the full year 2024, now accounting for 18% of total sales, up from 16% the previous year [2][3] - YETI plans to expand into Japan in 2025, viewing it as a foundational year for market entry [3] Product Innovation and Diversification - The Coolers & Equipment category grew by 17% in Q4 and 14% for the full year, driven by strategic diversification of the product portfolio [4] - Recent acquisitions, including Mystery Ranch and Butter Pat, support the launch of new products like cast iron cookware and a limited release backpack [5] Cash Flow and Capital Allocation - YETI generated $220 million in free cash flow for 2024, allowing for strategic investments and stock buybacks [6][7] - The board increased its share repurchase authorization by $350 million, totaling $450 million available for buybacks [8] Future Outlook - For 2025, YETI expects sales growth between 5% and 7%, with stronger performance anticipated in the second half of the year [10] - The company anticipates a 100-basis-point headwind from foreign exchange rates in 2025 but remains confident in its strategic direction [10]

Product Development and Innovation - In Q4 2024, the company introduced redesigned versions of the Hopper M30 Soft Cooler and Hopper M20 Soft Backpack Cooler, along with new sizes, the Hopper M15 and Hopper M12[40]. - The company acquired Mystery Ranch, LLC in Q1 2024 to enhance its capabilities in the bags category, launching a limited release of the first Mystery Ranch-inspired Bozeman pack in Q4 2024[42]. - The company expanded its Drinkware category in 2024 with new products including the Rambler French Press and Cast Iron Skillet[43]. - The company emphasizes a disciplined product development process, collaborating with YETI Ambassadors for feedback on prototypes[53]. - The company must continue to introduce new products and enhance existing ones to maintain sales, as the outdoor products market is characterized by frequent product introductions[80]. Sales and Revenue - The direct-to-consumer (DTC) channel accounted for 59% of net sales in 2024, while the wholesale channel accounted for 41%[46]. - Approximately 81% of net sales in 2024 were generated in the United States, with international sales representing 19%[50]. - In 2024, net sales distribution by quarter was 19% in Q1, 25% in Q2, 26% in Q3, and 30% in Q4, compared to 18%, 24%, 26%, and 32% in 2023 respectively[64]. - Consolidated net sales for the fiscal year ended December 28, 2024, were $1.83 billion, an increase of 10.3% from $1.66 billion in the previous year[298]. Financial Performance - Gross profit for the same period was $1.06 billion, resulting in a gross margin of approximately 58.1%[298]. - Net income for the fiscal year was $175.69 million, representing a 3.8% increase from $169.89 million in the prior year[298]. - The company reported basic net income per share of $2.07, up from $1.96 in the previous year[298]. - Cash provided by operating activities for the fiscal year ended December 28, 2024, was $261.386 million, compared to $285.942 million in 2023 and $100.894 million in 2022, indicating a decrease of about 8.6% year-over-year[304]. Operational Risks and Challenges - The company faces risks related to compliance with various government regulations, which could adversely affect its business and operations[74]. - Significant investments are being made in marketing and customer acquisition, but ineffective marketing could harm brand strength and customer confidence[79]. - Accurate forecasting of growth rates and product demand is critical; failure to do so could lead to excess inventory or product shortages[81]. - The company faces risks related to the timely procurement of products from third-party manufacturers, which could harm business operations and results[97]. Market and Competitive Landscape - The competitive landscape is challenging, with numerous brands offering similar products, which could impact market position if the company fails to compete effectively[88]. - Future growth depends on successfully expanding into additional consumer markets, including international markets like Canada, Australia, Europe, and Asia[87]. - The company focuses on international expansion, particularly in Asia, to leverage similar market dynamics as in the U.S.[50]. Supply Chain and Manufacturing - Increased costs and operational difficulties may arise from reliance on third-party contract manufacturers, including potential supply shortages and delays[94]. - Fluctuations in the cost and availability of raw materials, labor, and transportation could adversely affect gross margins and customer demand fulfillment[104]. - The two largest manufacturers for coolers & equipment products accounted for approximately 36% of production volume in 2024, while for drinkware products, they comprised about 74%[101]. Human Resources and Management - Retaining key management and skilled personnel is essential for effective business operations and further expansion[90]. - The company’s ability to attract and retain employees may be negatively impacted if its ESG practices do not meet evolving stakeholder expectations[111]. Legal and Regulatory Compliance - The company is subject to various legal and regulatory proceedings, which could result in substantial costs and harm its financial condition[130]. - Compliance with evolving privacy laws, such as the California Privacy Rights Act and GDPR, may incur significant costs and impact business operations[146]. Financial Management and Capital Structure - As of December 28, 2024, the company had $78.0 million in principal amount of indebtedness outstanding under its Credit Facility, which is secured by a first-priority lien on substantially all assets[150]. - The Credit Facility imposes restrictions on the company's ability to pay dividends, incur additional indebtedness, and make acquisitions, potentially limiting operational flexibility[151]. - The company relies on cash flow from operations to fund growth initiatives, and any shortfall may necessitate additional equity or debt financing, which could dilute existing stockholder ownership[149]. Economic and Environmental Factors - Economic conditions, including inflation and consumer spending trends, significantly affect the company's sales and profitability, with discretionary spending being particularly sensitive to economic downturns[138]. - The company’s sales could be adversely affected by changes in consumer preferences or governmental requirements related to climate change and environmental matters[112]. Cybersecurity and Technology - The company relies heavily on information technology systems, and any compromise or interruption could have a material negative impact on its business[142]. - The company experienced cybersecurity threats, including malware and computer virus attacks, which could disrupt operations and lead to financial losses[143].

Core Insights - Yeti has established itself as a premium brand in the outdoor recreation and lifestyle products industry, showcasing impressive financial and product strength while highlighting areas for investor attention [1] Financial Performance - Yeti's Superscore is 72/100, with a standout Financial score of 91/100, indicating exceptional financial health [4][8] - The company has a return on unleveraged net tangible assets (ROUNTA) of 36%, demonstrating solid operational efficiency [6] - Yeti's stock trades at a free cash flow yield of 5.2% and 18 times trailing earnings, supported by continued revenue growth and a healthy balance sheet with $280 million in net cash [7] Product and Market Position - Yeti's Product score is 76/100, reflecting a strong market position [6][8] - The high GARP (growth at a reasonable price) score of 87/100 suggests the stock may be attractively valued given its performance and growth prospects [7] Technology and Innovation - Yeti's Technology score is 51/100, indicating potential risks in technological capabilities [6][8] - The AI Implementation score is notably low at 27/100, suggesting that technology and automation capabilities will be key areas to monitor for maintaining competitive edge [9]

Company Overview - YETI Holdings Inc. is a premium brand recognized for high-performance and durable outdoor products including drinkware, coolers, and outdoor gear [1] - The primary consumer base consists of outdoor enthusiasts engaged in activities such as camping, climbing, hiking, fishing, hunting, and traveling [1] Market Position - YETI is well-established in the outdoor living market, catering to a niche segment of consumers who prioritize quality and performance in their outdoor equipment [1]