YETI HOLDINGS INC (NYSE:YETI) Stands Out as a High-Quality Pick Under the Caviar Cruise Strategy

The Caviar Cruise stock screening strategy is built to find high-quality companies ideal for long-term, buy-and-hold investing. Based on the ideas of quality investing, this method looks for businesses with solid revenue and profit growth, high returns on invested capital, low debt, and steady cash flow. The strategy checks both past performance and future growth potential, making sure the chosen companies have lasting competitive edges and efficient operations.

YETI HOLDINGS INC (NYSE:YETI) stands out as a strong choice under this method. The company, famous for its high-end outdoor and recreation products, shows several important traits that fit the Caviar Cruise standards.

Key Strengths of YETI Based on Caviar Cruise Criteria

• Strong EBIT Growth Faster Than Revenue Growth
  In the last five years, YETI has achieved an EBIT compound annual growth rate (CAGR) of 22.96%, much higher than its revenue growth of 4.11%. This shows better profitability, likely due to cost savings, pricing strength, or better operations, all signs of a strong business.

• High Return on Invested Capital (ROIC)
  YETI’s ROIC (excluding cash, goodwill, and intangibles) is 42.36%, well above the Caviar Cruise target of 15%. A high ROIC means the company uses capital well to create profits, highlighting its competitive edge.

• Low Debt Compared to Free Cash Flow
  The company’s debt-to-free cash flow ratio is just 0.32, meaning it could pay off all its debt in under four months with current cash flows. This financial strength lowers risk and allows for reinvestment or shareholder rewards.

• Strong Profit Quality
  YETI’s five-year average profit quality—measured as free cash flow relative to net income—is 118.49%, far above the 75% benchmark. This shows earnings reliably turn into cash, a mark of good financial health.

Fundamental Analysis Summary

A closer look at YETI’s fundamental report confirms its appeal for quality investors:

• Profitability: The company scores 10/10, with top-tier margins (gross margin of 58.18%, operating margin of 13.30%) and strong returns on equity (23.09%).
• Financial Health: YETI earns an 8/10 for solvency, backed by a low debt-to-equity ratio (0.09) and a solid Altman-Z score (7.13), indicating very low bankruptcy risk.
• Valuation: With a P/E ratio of 13.39, YETI looks fairly priced compared to industry peers and the broader S&P 500.

Points to Consider

While YETI does well in profitability and financial stability, its future revenue growth estimates are modest (4.11% annually), hinting at a possible slowdown. Quality investors should balance this against the company’s strong fundamentals and decide if its premium brand and operational strength can keep driving success.

Finding More Quality Investment Options

For investors looking for other companies that meet the Caviar Cruise standards, the full screen results are available here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.