By Ian Salisbury

Outdoor gear maker Yeti Holdings has lately been camping in the rain. The weather may finally be clearing.

Yeti, known for its upscale coolers and water bottles, saw shares surge 8% on Thursday after reporting better-than-expected earnings and hiking its 2026 outlook.

Yeti said first-quarter operating profit was 26 cents a share, handily beating Wall Street forecast for 18 cents a share. The company also said it expects 2026 profit growth of 14% to 17%, up from its prior outlook of 12% to 14%.

Yeti's shares, which currently trade around $40, remain well below their five-year high of $100, as the company has weathered one storm after another. The stock's initial run-up, which peaked in early 2022 reflected Covid-era excitement for outdoor gear, especially its trendy $45 water bottles, but the hype eventually wore off.

Just as Yeti seemed to be getting its footing, President Trump's tariff war threw its business back into disarray, forcing it to scramble to move production out of China. That has led to a big hit to earnings in recent quarters. It's worth noting that while first-quarter profits beat analysts estimates, they were still down about 16% year over year.

The good news for investors: Yeti may well have turned a corner and its stock is cheap, allowing for plenty of potential upside.

In the company's conference call Thursday, CEO Matt Reintjes told investors that the impact of tariffs on the company's earnings would peak during the first half of 2026, allowing profit margins to recover in the second half. The company's efforts to move production away from tariff hotspots, along with price hikes, should also help. "We believe these are known and transient headwinds, not long-term structural issues, " Reintjes said.

At the same time, Yeti is seeing sales growth outside the cutthroat drinkware category. Overall first-quarter sales grew 8% to $380 million from $351 million a year earlier. Meanwhile, sales of coolers and equipment surged 11% to $156 million. International sales also grew more than 9% to $87 million, representing just under a quarter of Yeti's total sales.

Despite the strong first-quarter results, investors can still pick up Yeti shares from the sale shelf. Shares trade at about 14 times estimated 2026 earnings. That's much cheaper than the State Street Consumer Discretionary Select Sector SPDR, an exchange-traded fund that tracks the sector, which trades at around 25 times.

Write to Ian Salisbury at ian.salisbury@barrons.com

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May 14, 2026 15:10 ET (19:10 GMT)

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