3 Reasons to Avoid YETI and 1 Stock to Buy Instead

October 15, 2025 at 00:03 AM EDT

YETI Cover Image

YETI trades at $34.20 and has moved in lockstep with the market. Its shares have returned 21.1% over the last six months while the S&P 500 has gained 23.2%.

Is there a buying opportunity in YETI, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Is YETI Not Exciting?

We're swiping left on YETI for now. Here are three reasons you should be careful with YETI and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, YETI grew its sales at a 14% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

2. Cash Flow Margin Set to Decline

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Over the next year, analysts predict YETI’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 13.7% for the last 12 months will decrease to 5.2%.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, YETI’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

YETI Trailing 12-Month Return On Invested Capital

Final Judgment

YETI’s business quality ultimately falls short of our standards. That said, the stock currently trades at 13.8× forward P/E (or $34.20 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at the most dominant software business in the world.

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