Yeti (YETI -1.82%) beat expectations for sales and earnings during what was supposed to be the slowest quarter of 2019, and the cooler maker also raised its full-year guidance. But investors still sold off its shares on what analysts are attributing to profit taking after the stock more than doubled this year.

Despite the pullback in its shares, Yeti's business still looks sound and primed for growth.

Man on boat drinking from Yeti tumbler.

Image source: Yeti.

Stronger-than-expected growth

The maker of coolers, drinkware, and other lifestyle products said sales jumped 12% to $231.7 million compared to $206.3 million last year. Yeti's direct-to-consumer channel powered ahead with a 43% increase versus flat results in the wholesale channel.

Consumers indicated they were still more interested in buying its drink mugs and the like: Such sales jumped 16% to $117 million, while sales of actual coolers were up only 9% to $109 million. Yeti is also adding more ancillary products to its lineup, such as new sizes of dog bowls and dog beds, the latter of which will be available later this month.

Yeti also benefited from offering consumers increased choice and customization options, such as adding new colors to its drinkware line, though its newly introduced backpacks and totes have also been well received.

And more growth to come

Still, the cooler maker was expecting growth this quarter to slow because it had pulled forward about $5 million worth of orders into the first quarter from its wholesale channel. While Yeti pegs the cost of that occurrence at about 240 basis points of sales growth this period, it also gained a 400-basis-point favorable impact from a revenue recognition change related to Yeti's presence on's third-party-seller marketplace. Last quarter, that swiped 300 basis points of growth from results.

The quarter being stronger than anticipated led to Yeti reporting adjusted net income growing 23% to $28.6 million, or $0.33 per share, compared to adjusted earnings of $23.2 million, or $0.28 per share last year. It also allowed Yeti to raise its outlook for the full year, since it expects growth to accelerate at double-digit rates.

Full-year sales are now expected to rise between 13.5% and 14%, up from its prior guidance of between 11.5% and 13%, but most of that will occur in the fourth quarter.

Not a risk-free play, though

Part of what Yeti has been doing for the past year has been building out both its capabilities and capacity, and the cooler maker thinks it has left a lot of money on the table around the Christmas holidays because it didn't have the ability to meet all the demand that was there. That's no longer the case, because it will be opening its second distribution center in Salt Lake City, which will enable it to handle more orders later into the season.

It has high hopes for the holidays this year, which is why though it expects double-digit gains in the second half of 2019, it anticipates most of that coming in the fourth quarter.

While Yeti's business still looks strong, it still trades at some elevated levels despite the pullback after earnings, and it faces a few risks, such as building out a limited retail store footprint. It opened its second store in Charleston, South Carolina, and it wants to have as many as six, but that's a different business than being a wholesaler or operating an online channel.

Regardless of those challenges, the cooler maker's overall operations appear solid even if the stock is still pricey at the moment.