A hot summer month seems like the ideal time for a company that specializes in coolers and large drink tumblers. Alas, that sure wasn't the case for Yeti Holdings (YETI +3.21%), which saw its stock price melt by more than 16% over the course of the month. Much of this had to do with the company's second-quarter results, which weren't as impressive as they first seemed.
A beat and a raise
For the quarter, Yeti managed to increase its net sales by 9% year over year to almost $484 million. The main driver of this growth was the company's coolers and equipment business, which posted a 16% increase to more than $232 million. Drinkware sales only inched up by 2% to slightly over $241 million. The "other" category was 13% higher at almost $11 million.
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The company reported that its international sales rose by a sturdy 19% to just under $93 million. Coincidentally, that comprised 19% of the total for the quarter.
On the bottom line, Yeti's net income not under generally accepted accounting principles (non-GAAP, or adjusted) went in the opposite direction. It fell by 8% to just under $51 million, or $0.67 per share.
There's an asterisk next to that figure, however, as the company received refunds for tariffs incurred by the federal government last year (which were later struck down in a series of court decisions). These resulted in a net gain of $0.03 per share. I should add that the per-share number was aided by aggressive stock buybacks during the quarter.
Regardless, Yeti scored a convincing beat on earnings, as analysts were collectively modeling only $0.55 per share for adjusted net income. The company broadly met pundit projections for revenue.
In its earnings release, Yeti quoted Matt Reintjes as saying that "Our results demonstrate broad-based execution across categories, channels, and geographies, powered by the Yeti brand and the expanding reach of our product portfolio."
Reintjes and his management team also felt compelled to raise full-year earnings guidance to $2.94 to $3 per share in adjusted net profit. That's up substantially from the previous range of $2.83 to $2.89. However, they maintained their forecast for net sales, which are expected to be 7% to 8% higher than the 2025 tally.
NYSE: YETI
Key Data Points
Ignoring the bullish new analyst takes
After the earnings report, several analysts adjusted their takes on Yeti stock. For the most part, these changes were positive, mainly in the form of price target raises.
I think there are a few culprits in the post-earnings rout of the company's shares. One is top-line growth, which is notably below some of the double-digit increases Yeti posted during the large-drink tumbler craze that peaked in 2024.
Another is profitability, since no one likes to see a decline. Also, the quarter's bottom line was affected by tariffs, and the per-share figure was boosted by buybacks. Finally, both selling, general and administrative expenses and long-term debt rose more steeply than net sales, by 17% and 41%, respectively.
Although Yeti is still well profitable and its sales were heading north, I'm not seeing great opportunities for meaningful growth now that the aforementioned tumbler trend is well in the past. I don't find this niche consumer goods stock particularly compelling these days.
