YETI HOLDINGS INC (NYSE:YETI) Presents a Compelling Value Investment Case

YETI HOLDINGS INC (NYSE:YETI) presents an interesting case study for investors using a value investing approach. The method for this analysis comes from Benjamin Graham's principles, where investors look for companies trading below their intrinsic value while having sound fundamental traits. This approach centers on finding securities where the market price does not completely represent the company's basic financial condition and earnings capacity, forming possible chances for long-term capital growth.

Valuation Metrics

The company's valuation profile is notable as especially interesting for value-focused investors. YETI's present valuation measures indicate the stock could be trading at a lower price compared to both its industry counterparts and wider market indicators.

• Price/Earnings ratio of 12.68 is better than the industry average of 35.85
• Price/Forward Earnings ratio of 12.06 places YETI at a lower cost than 94% of leisure products companies
• Enterprise Value to EBITDA and Price/Free Cash Flow ratios both show YETI is less expensive than 85% of industry counterparts
• Both P/E ratios are significantly under S&P 500 averages of 27.69 (trailing) and 23.18 (forward)

For value investors, these valuation measures are important because they represent the margin of safety concept, buying at prices low enough under intrinsic value to offer a buffer against calculation mistakes or market swings.

Financial Health Assessment

YETI shows sound financial health with a ChartMill Health Rating of 8 out of 10, signaling a strong balance sheet that fits with value investing's focus on company strength.

• Altman-Z score of 6.51 shows very low bankruptcy risk and is better than 82% of industry companies
• Debt to Free Cash Flow ratio of 0.31 implies the company could pay off all debt in about four months
• Current Ratio of 2.52 indicates sufficient liquidity to cover short-term debts
• Reducing shares outstanding over one and five-year periods shows capital allocation that benefits shareholders

This financial steadiness is necessary for value investors, as it lowers the chance of permanent loss of capital while waiting for the market to acknowledge the company's intrinsic value.

Profitability Analysis

The company performs well in profitability with a perfect ChartMill Profitability Rating of 10, indicating operational effectiveness that value investors look for in undervalued companies.

• Return on Invested Capital of 18.50% is higher than the industry average of 7.26% and is better than all industry counterparts
• Profit Margin of 9.73% is in the top 3% of the leisure products industry
• Steady profitability over the last five years with positive cash flows each year
• All main margins (gross, operating, profit) have displayed significant gains in recent years

Good profitability gives value investors assurance that they are purchasing a quality business at a reduced price, not just a low-cost company with ongoing problems.

Growth Considerations

While YETI's growth path displays some slowing, the company keeps acceptable historical growth rates that add to its value case.

• Revenue has increased at an average yearly rate of 14.90% over recent years
• Earnings Per Share has risen by 18.24% on average each year over the same time
• The present year shows more moderate growth with revenue up 3.62% and EPS rising 5.51%
• Future estimates point to continued but slower growth in both revenue and earnings

For value investors, average growth paired with an appealing valuation can be better than high-growth, costly companies, as it lessens the risk of paying too much for future potential.

Investment Perspective

The mix of YETI's appealing valuation, high profitability, and good financial health forms a profile that fits well with value investing ideas. The company's present valuation multiples suggest the market might be underestimating its strong operational results and financial steadiness. While growth has slowed from past levels, the company's basic strengths offer a margin of safety that value investors usually look for.

Value investors may find YETI especially notable given its valuation discount compared to both industry counterparts and the wider market, along with profitability measures that are some of the best in its field. The company's financial health decreases potential loss risk, while its valuation offers possible gains if market opinion gets better or growth picks up.

For investors looking for similar chances, more screening results are available through this Decent Value Stocks screening method.

Disclaimer: This analysis is based on fundamental data and financial measures available through ChartMill's reporting system. It represents an objective assessment of the company's financial traits and is not meant as investment advice. Investors should perform their own research and think about their personal financial situations before making investment choices. Past performance does not ensure future results, and all investments carry risk including possible loss of principal.