Should I Buy Yeti (YETI)? Finance YouTuber Analysis

The YouTuber sold Yeti due to a re-evaluation of its competitive moat, or lack thereof, which significantly lowered his fair value estimate from $55 to $40 per share. Despite initial positive signs like debt reduction and share buybacks, the recent earnings miss and flat guidance, combined with the absence of a strong moat, made the stock no longer a compelling value play with sufficient margin of safety.

“After reevaluating their lack of competitive advantage, I had to adjust the risk score to 54. Do you know what it did to my valuation? It dropped the fair value to just $40 per share.”

The YouTuber holds Yeti as a speculative bet, acknowledging it's currently in the red. He expects the price to go up as it's a strong business generating plenty of free cash flow compared to its price, despite not having the strong dominance of his core holdings.

“They're both strong businesses. They're both generating plenty of free cash flow especially compared to the price. So I expect the price to go up hopefully soon.”

The YouTuber bought Yeti Holdings, citing strong financials, healthy cash flow, share buybacks, and a reasonable valuation at 14 times earnings. He believes it remains fundamentally strong despite tariff fears and will adapt.

“strong financials, healthy cash flow, buying back shares, and reasonably priced at 14 times earnings.”

The YouTuber is avoiding Yeti stock due to its high valuation, trading at nearly 60x P/E (or 18x next 12 months earnings) for a company with only 4-5% revenue growth. He argues that for a company with mid-single-digit growth, a P/E multiple of 10-13 would be more appropriate. He loves the product and brand but finds the current price too high.

“unless the stock drops this is just one I'm gonna stay out of but again very high quality company but it depends on the price that you pay and that's what's keeping me out of shares right now”

Travis Hoium suggests avoiding Yeti stock at its current valuation, despite acknowledging the strength of its brand and high gross margins. He notes that rising operating expenses (SG&A) are eroding profitability as sales growth remains flat, indicating a lack of operating leverage. He would consider buying if the price-to-earnings multiple drops to a more attractive 10-13 times, aligning with its slower growth profile.

“I'd like to see that price to earnings multiple fall to more like 10 to 13 times that's a much more attractive valuation for a slower Growth Company”

Travis Hoium identifies Yeti as an attractive long-term buy, noting its significant stock price decline from all-time highs. He highlights the company's strong revenue growth (more than doubled in five years), positive net income, and cash flow from operations. Despite near-term operational challenges related to post-pandemic spending shifts, he believes the brand's quality and the current valuation (P/E of 38, or 15-20 on a normalized basis) make it a reasonable multiple to pay for a high-quality business.

“I think that's a really reasonable multiple to pay what I'm looking for over the next few quarters is are they able to keep operating costs under control what does revenue growth look like and then what do margins look like.”

The analyst believes Yeti is a reasonable entry point for long-term investors due to its strong brand, pricing power, and a recent drop in its price-to-earnings multiple to 19x. However, he flags inventory levels and declining gross margins as a red flag to monitor, suggesting that improvement in these areas would be a positive sign.

“given the stocks 19 price to earnings multiple I think this is a reasonable entry point but the one piece of caution here is watch inventory and gross margins to see if those both improve in 2023.”

The YouTuber recommends buying Yeti due to its significant stock price drop (60-70% from highs), making its valuation attractive at under a 20 P/E multiple. He highlights the company's strong brand, growing product line, and consistent profitability with nearly tripled revenue over five years, despite potential short-term recession headwinds.

“A stock is trading for under a 20 price to earnings multiple and given that growth rate I think that is a very reasonable evaluation to pay for this stock.”