YETI HOLDINGS INC (NYSE:YETI) Stands Out as a Quality Investment in Caviar Cruise Screen

The Caviar Cruise investment strategy represents a systematic method for finding good companies for long-term investment. This approach, based on the work of Belgian author Luc Kroeze, concentrates on businesses showing steady revenue and profit increases, high returns on invested capital, strong cash flow generation, and acceptable debt levels. The strategy uses measurable filters to find companies that display fundamental soundness and operational quality, giving investors a beginning for more investigation into possible long-term holdings.

Financial Performance Measurements

YETI HOLDINGS INC (NYSE:YETI) shows several traits that match quality investment standards. The company's financial measurements show a trend of operational effectiveness and financial control that quality investors usually look for.

• EBIT Growth (5Y CAGR): 23.0%
• Return on Invested Capital (Excluding Cash/Goodwill): 39.5%
• Debt to Free Cash Flow Ratio: 0.31
• Average Profit Quality (5-year): 118.5%
• Revenue Growth (5Y CAGR): 3.6%

Operational Quality

The company's outstanding EBIT growth of 23% each year over five years is much higher than its revenue growth, showing better operational effectiveness and possible pricing strength. This measurement is especially significant in quality investing because it implies the company is growing more profitable without always needing similar revenue rises, often pointing to competitive benefits or scale efficiencies. The EBIT growth greatly surpassing the 5% level in the Caviar Cruise screen shows solid operational performance.

Capital Effectiveness

YETI's return on invested capital excluding cash and goodwill is at a notable 39.5%, well above the 15% minimum need in the quality screen. This measurement is important for quality investors because it shows how well management uses capital to create profits. A high ROIC suggests the company has lasting competitive benefits and can put earnings back into the business at good rates of return, building long-term shareholder value.

Financial Condition and Cash Flow

The company's financial soundness is clear in its debt handling and cash flow creation. With a debt-to-free cash flow ratio of 0.31, YETI could in theory pay off all its debt in about four months using current free cash flow. This outstanding ratio gives financial adaptability and lowers risk, significant factors for long-term investors. Also, the company's profit quality of 118.5% over five years shows it turns accounting profits into real cash flow effectively, often going beyond its reported net income.

Fundamental Analysis Summary

According to the detailed fundamental analysis report, YETI gets an overall rating of 7 out of 10, with especially good scores in profitability (10/10) and financial condition (8/10). The analysis points out several favorable qualities:

• Outstanding profitability measurements across return on assets, equity, and invested capital
• Good and getting better margins across gross, operating, and profit margins
• Sound financial condition with acceptable debt levels and good liquidity
• Fair valuation compared to industry peers and wider market indices

The report mentions that while past growth has been solid, future growth projections seem more measured, with analysts forecasting about 3.6% yearly revenue growth and 5.5% EPS growth.

Quality Investment Factors

Beyond the number-based measurements, quality investors would think about YETI's business structure and market standing. The company has built a good brand in the outdoor and recreation market, possibly giving it pricing strength and customer commitment. Its product variety across coolers, drinkware, and accessories offers several income sources. However, investors should also think about factors like management skill, competitive environment, and the company's ability to keep its premium position in possibly difficult economic conditions.

For investors wanting to investigate similar quality investment possibilities, the Caviar Cruise screening method offers a systematic method for finding companies with sound fundamental traits.

This analysis is for information purposes only and does not form investment guidance, suggestion, or backing of any security. Investors should do their own investigation and talk with financial consultants before making investment choices. Past results do not assure future outcomes, and all investments carry risk including possible loss of original investment.