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We came across a bullish thesis on YETI Holdings, Inc. (NYSE:YETI) on Substack by Rene. In this article, we will summarize the bulls’ thesis on YETI. YETI Holdings, Inc. (NYSE:YETI)'s share was trading at $39.31 as of Dec 24th. YETI’s trailing and forward P/E were 17.02 and 13.51 respectively according to Yahoo Finance.
A family enjoying a camping trip, with the company's coolers, cargo bags, and other outdoor lifestyle products in the frame.
Yeti, a premium lifestyle brand known for its high-quality outdoor and leisure products, has built a strong market presence through a combination of functionality, durability, and aspirational appeal. Founded in 2006 by Roy and Ryan Seiders, Yeti initially focused on high-performance coolers but has since diversified into a variety of products including drinkware, backpacks, and barware. Despite its premium prices, Yeti’s products resonate deeply with a loyal customer base, particularly those from middle- to upper-middle-class demographics who value quality and reliability. Yeti’s customers often view purchases as long-term investments, reinforcing brand loyalty and repeat business.
The company’s direct-to-consumer (DTC) model has played a critical role in driving growth, accounting for over half of total revenue. By selling through its own website and retail stores, Yeti maintains control over its brand image while enjoying higher margins than traditional wholesale channels. In addition to its core products, Yeti has expanded into related categories, such as coffee gear and cast-iron cookware, effectively building an ecosystem that encourages repeat purchases. This approach has allowed the company to create a robust brand that blends functionality with status, distinguishing itself from competitors.
Financially, Yeti has experienced significant growth, with revenue tripling from approximately $600 million in 2016 to over $1.8 billion today. The company has consistently maintained gross margins above 50%, driven by its pricing power and premium product offerings. Yeti's focus on high-margin categories and product innovation is key to its profitability, and management is targeting a gross margin surpassing 60% within the next five years. Additionally, Yeti’s return on invested capital (ROIC) has averaged 28.5% over the past decade, showcasing its efficient capital deployment and strong financial performance.
Looking ahead, Yeti’s growth strategy revolves around three key pillars: international expansion, product innovation, and acquisitions. With only 18% of revenue coming from outside the U.S., international markets represent a significant opportunity for growth, particularly in regions like Europe and Asia. Yeti’s recent acquisitions, including premium backpack brand Mystery Ranch and cast-iron cookware maker Butter Pat Industries, are expected to help the company capture new customer segments and expand its product portfolio.