Stock Valuation Of The Week

Stock Insight

YETI Holdings has carved out a strong lifestyle brand in the premium outdoor and drinkware space, but its valuation has been beaten down, now trading at a substantial discount to our fair value estimate of $53.10. This implies 66% upside for long-term investors.

The company’s free cash flow history is uneven, with negative years early on (notably 2015–2016) but a sharp improvement starting in 2017. After a peak in 2020 at $343M — boosted by pandemic-driven demand — FCF declined but has remained solid in 2023 ($235M) and 2024 ($219M), indicating renewed operational stability.

While the 5-year CAGR of 40% is impressive, our valuation uses a more conservative growth rate of 14.1%, in line with long-term brand-driven cash flow trends. With a discount rate of 11.36% and a modest terminal growth rate of 2.5%, this provides a grounded 10-year DCF outlook.

YETI’s strong brand loyalty, pricing power, and improving fundamentals make it worth watching. That said, investors should be aware of risks tied to consumer discretionary spending and potential margin pressures. At current levels, however, the margin of safety is compelling.