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    Is Weakness In YETI Holdings, Inc. (NYSE:YETI) Stock A Sign That The Market Could be Wrong Given Its Strong Financial Prospects?

    Simply Wall St·06/14/2025 13:19:21
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    YETI Holdings (NYSE:YETI) has had a rough three months with its share price down 6.7%. However, stock prices are usually driven by a company’s financial performance over the long term, which in this case looks quite promising. Particularly, we will be paying attention to YETI Holdings' ROE today.

    Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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    How Do You Calculate Return On Equity?

    ROE can be calculated by using the formula:

    Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

    So, based on the above formula, the ROE for YETI Holdings is:

    23% = US$176m ÷ US$764m (Based on the trailing twelve months to March 2025).

    The 'return' is the yearly profit. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.23.

    View our latest analysis for YETI Holdings

    What Is The Relationship Between ROE And Earnings Growth?

    Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

    YETI Holdings' Earnings Growth And 23% ROE

    To begin with, YETI Holdings has a pretty high ROE which is interesting. Secondly, even when compared to the industry average of 16% the company's ROE is quite impressive. This probably laid the groundwork for YETI Holdings' moderate 5.9% net income growth seen over the past five years.

    Next, on comparing with the industry net income growth, we found that YETI Holdings' growth is quite high when compared to the industry average growth of 3.6% in the same period, which is great to see.

    past-earnings-growth
    NYSE:YETI Past Earnings Growth June 14th 2025

    Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if YETI Holdings is trading on a high P/E or a low P/E, relative to its industry.

    Is YETI Holdings Efficiently Re-investing Its Profits?

    YETI Holdings doesn't pay any regular dividends, meaning that all of its profits are being reinvested in the business, which explains the fair bit of earnings growth the company has seen.

    Summary

    On the whole, we feel that YETI Holdings' performance has been quite good. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. On studying current analyst estimates, we found that analysts expect the company to continue its recent growth streak. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.