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YETI Holdings (YETI) designs and distributes consumer outdoor and recreational products under the popular YETI brand. Its line-up is made for activities like hunting, fishing, and camping, and include premium coolers, drinkware, waterproof and everyday bags, and other outdoor gear.

Weak Outlook Weighs on YETI

Shares of YETI dropped after the company reported fourth quarter results back in February. Adjusted earnings and revenue of $0.74 per share and $443.1 million both topped expectations; profit increased 18% and sales grew 17.9% year-over-year.

Direct-to-consumer net sales were up 21% over the prior-year period to $263.9 million, driven by strong performance in both its Drinkware and Coolers & Equipment segments, and wholesale revenue moved 13% higher.

Additionally, cash increased to $312.2 million for the year compared to $253.3 million at the end of fiscal 2020.

Despite a solid fourth quarter, a lower-than-anticipated outlook for the 2022 fiscal year spooked investors. YETI said that adjusted earnings should be between $2.82 and $2.86 per share, lagging behind Wall Street’s consensus of $2.94. Net sales are expected to increase 18% to 20%, with growth weighted towards the back half of the year.

Bottom Line

YETI is a Zacks Rank #5 (Strong Sell).

Seven analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has dropped nine cents to $2.87 per share. However, YETI’s earnings are expected to grow about 11.7% for fiscal 2022, with sales increasing 19.6% for the same period.

Shares of YETI are down about 40% over the last six months as the stock got caught up in the broad-based tech and growth stock sell-off.

Adding to YETI’s woes is bearishness from some on Wall Street.

Analysts at Citi, Raymond James, Cowen, and Baird all lowered their price targets. Citi analyst Wendy Nicholson said that 2022 looks like it will be “somewhat choppy” for YETI due to persistent input freight, input costs, and duties headwinds. But Nicholson thinks these setbacks are transitory, telling clients in a research note that “there could be upside to guidance since management assumed no alleviation of these pressures.”

These warnings from Wall Street, coupled with a tough trading environment for high-flying growth stocks, have led investors to reevaluate YETI. After its recent slide, shares now trade at a forward earnings multiple of 21.3X.

YETI may continue to experience even more wild ups and downs as growth stocks continue to sell off, so potential investors who want to own the popular drinkware maker for the long term should proceed with caution.