Yeti Holdings Has Real Potential For Investors

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About: Yeti Holdings (YETI)
by: David Evans

Summary

The company’s prospectus notes that it’s used key influencers to drive up its market share amongst diverse audiences prone to outdoors activity.

The company has grown its profile and bolstered sales figures so that they reached a monstrous $469 million in 2015.

Already in the first half of 2018, Yeti has generated a whopping $342 million in sales.

After withdrawing its original plans for a market debut just a few months ago, the Austin-based Yeti Holdings (YETI), which has grown famous for its heavy-duty coolers, has refiled for an IPO that could net the company hundreds of millions if things play out ideally. While Yeti previously got cold feet ahead of its first IPO, citing market conditions as it withdrew its plans, the company is now confident that it could raise over $100 million in its market debut, with some musing that it could bring in as much as $300 million.

Here are the inside details of what we know about Yeti Holdings and its market debut thus far, and how the company intends to avoid another embarrassing withdraw that it endured just a few months ago.

Things are looking up for Yeti

Ever since earlier this year, when cooler-producing Yeti Holdings (NYSE: YETI) decided to withdraw its plans for a market debut, some have been musing that the company is in dire straits and that it was unlikely to go public anytime soon. The market conditions that Yeti cited in order to withdraw from its IPO bid have seemingly cleared up, however, and the company is giving every indication that it’s incredibly hopeful for its near-future now that it’s gearing up to become publicly traded. Yeti, which specializes in outdoors gear like its specialty coolers, has only filed for an IPO of $100 million thus far, but that’s likely a placeholder figure which is soon to change.

According to Renaissance Capital, for instance, there are reasons to believe that Yeti could ultimately be holding out for as much as $300 million from investors in its public debut. Yeti was previously hoping to accrue that much in 2016, when it first filed for its IPO, but its early 2018 withdrawal at least temporarily dashed those hopes. Now, however, the cool behemoth has every intention of making a large splash in the market, per its S-1 filings.

Information derived from Yeti’s prospectus indicates that the company has been doing a bang-up job of expanding its audience in recent years, for instance, a fact doubtlessly likely to propel its IPO towards success if investors end up valuing a diverse consumer base. Where Yeti’s famous coolers and outdoors gear were once niche products aimed exclusively at outdoorsmen, for instance, they’ve since developed into a more family-centered brand with a positive reputation for getting the job done in the wilderness.

The company’s prospectus notes that it’s used key influencers to drive up its market share amongst diverse audiences prone to outdoors activity, for instance. By building grass-roots connections to potential customers by utilizing brand ambassadors, or popular social media personalities which peddle Yeti products to their followers, the company hopes to convince investors that it has serious staying power in the market. Before they’ve convinced, however, investors will want to take a peek under the company’s hood to get a look at its finances.

Yeti is growing very rapidly

The first thing that will jump out to investors when they review Yeti’s finances is the fact that the company has enjoyed almost startlingly-fast growth recently. Whereas Yeti only sold a mere $90 million worth of products in 2013, for instance, the company has since grown its profile and bolstered sales figures so that they reached a monstrous $469 million in 2015. Such an astonishing rate of growth will doubtlessly make Yeti’s IPO one of the most closely-watched market debuts in recent history.

Not only is Yeti growing rapidly, but the company is also profitable, a relative rarity for many businesses going public that could serve it well amongst investors. Already in the first half of 2018, Yeti has generated a whopping $342 million in sales, too. A large part of the company’s success thus far can be attributed to its ability to broaden its audience; per its prospectus, while Yeti once had a customer base of nearly 70 percent hunters, they now make up a mere 38 percent of its total base. As long as it keeps demonstrating a capacity to expand the appeal of its products to new shoppers, Yeti could very well quickly win the hearts and minds of many investors.

The outdoor gear market that Yeti is trying to dominate is rapidly growing around the world, but isn’t without its challenges, either. The company will have to contend with the virtual death of brick-and-mortar retail stores as we know it, establishing a strong digital presence for itself if it has any hopes of maintaining its success well into the 21st century. Similarly, some stores overstocked Yeti products in 2016, a distasteful event for profits that dampened overall sales figures the next year. All in all, however, Yeti has demonstrated real potential when it comes to growth and profitability.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.