Back to top

Analyst Blog

On Aug 8, we downgraded outdoor and sporting goods retailer, Cabela's Incorporated (CAB - Analyst Report) to Neutral based on the near-term challenges associated with the stock.

Why the Downgrade?

On Jul 25, 2013, Cabela’s came up with strong second-quarter 2013 results wherein the top and bottom line results registered double-digit growth rate and handily surpassed the Zacks Consensus Estimate.

However, the company’s growth is largely attributed to strong sales of firearms and ammunitions, which is now showing signs of moderation. Moreover, the company faces difficult year-over-year comparisons in the third quarter, which further limits its upside potential. 

Alongside, the outdoor recreation and casual apparel and footwear markets are highly fragmented and competitive. Cabela’s faces stiff competition from discount stores such as Wal-Mart Stores Inc. (WMT - Analyst Report) and Target Corporation (TGT - Analyst Report), and specialty retailers, such as Dick's Sporting Goods Inc. (DKS - Analyst Report), which may weigh upon its results as these competitors have a large number of stores, greater market presence and brand recognition, alongside adequate financial resources.

Despite the challenges, we believe the strong performance of the company’s next-generation stores will continue to boost its results. Cabela’s next-generation stores are outperforming the company’s legacy stores in terms of both sales and profit per square foot. We remain optimistic about its next generation store format as it requires less capital investment, enhances store productivity, and helps increase sales per square foot.

Moreover, Cabela's CLUB Visa program continues to register strong growth, reflecting a rise in average active accounts with improvement in delinquencies and net charge-offs along with lower funding costs.  Currently, Cabela’s holds a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%