Please ensure Javascript is enabled for purposes of website accessibility

Why Yeti Holdings Stock Lost a Third of Its Value in May

By Keith Noonan – Jun 11, 2019 at 5:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Yeti was up big heading into last month, but its first-quarter report helped put bullish sentiment on ice.

What happened

Shares of Yeti Holdings (YETI -1.52%) fell 33% in May, according to data from S&P Global Market Intelligence. The stock retreated early in the month after investors decided that its first-quarter results and guidance weren't strong enough to justify the company's valuation, and its share price continued to trend lower through the month amid sell-offs for the broader market.

YETI Chart

YETI data by YCharts.

Yeti reported first-quarter results on May 2 and delivered sales and earnings for the period that came in significantly ahead of the average analyst targets. While the company put up solid sales and earnings beats in the quarter and raised its earnings guidance, it looks like those weren't enough for investors to continue backing the stock's bullish run. 

A Yeti cooler in khaki and light green.

Image source: Yeti.

So what

Yeti's first-quarter revenue increased 15% year over year to reach $155.4 million and surpass the analyst target for sales of $143.2 million. Earning per share of $0.06 also came in well ahead of the analyst target for per-share earnings of $0.02. The company expects full-year sales to grow between 11.5% and 13%, and it raised its target earnings range to between $1.02 and $1.06 per share -- up from its previous guidance for per-share earnings between $0.99 to $1.04. Hitting the midpoint of its target would see earnings expanding roughly 14% annually. 

The company did record revenue in Q1 for some items that will actually ship in Q2, which may have been taken as a bad omen by investors. Heading into May, the thermos and cooler company's stock had climbed a whopping 140% through the year. Yeti had managed to defy a sizable contingent of bears and put the squeeze on short-sellers, but it looks like investors may have simply decided that its valuation was too rich to justify and taken the few elements of uncertainty that had been mixed in with the mostly good news as an opportunity to take gains on the stock. 

Now what

Yeti stock has seen a bit of recovery in June, with shares gaining roughly 5.8% in the month so far. 

YETI Chart

YETI data by YCharts.

Shares trade at roughly 2.4 times this year's expected sales and 24 times expected earnings.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

YETI Holdings, Inc. Stock Quote
YETI Holdings, Inc.
YETI
$28.52 (-1.52%) $0.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.