Cabela's Inc. ( CAB - Analyst Report ) , one of the leading specialty retailers and direct marketers of hunting, fishing, camping, and related outdoor merchandise, is set to release its second-quarter 2012 financial results on Thursday, July 26, 2012.

The current Zacks Consensus Estimate for the quarter stands at 39 cents per share, indicating an estimated year-over-year increase of 21.9%. Revenue, as per the Zacks Consensus Estimate, is pegged at $604 million.

First-Quarter Recap

Cabela's delivered solid first-quarter 2012 results, based on healthy performance at retail stores, strong growth at the financial services division, elevated merchandise gross margin and lower expenses. Quarterly earnings of 40 cents a share exceeded the Zacks Consensus Estimate of 33 cents and jumped 60% from 25 cents earned in the prior-year quarter.

Total revenue, comprising retail, direct and financial services revenues, increased 6.3% year over year to $623.5 million and surpassed the Zacks Consensus Estimate of $621 million.

Merchandise gross margin expanded 150 basis points to 34.5% during the quarter. Management reiterated its long-term goal of increasing the margin by 200–300 basis points.

Agreement of Estimate Revision

For the to-be-reported quarter, the earnings estimates have remained almost unchanged with only two out of nine estimates raised over the past 30 days, while no revisions were made in the past 7 days. Moreover, for fiscal 2012, the estimates witnessed minimal revision, as only one out of nine estimates moved upwards in the last 30 days. Again estimates remained unchanged in the last 7 days.

Magnitude of Estimate Revision

Due to the lack of catalysts impacting the estimates directly or indirectly, most of the analysts maintained their view. Consequently, the Zacks Consensus Estimate remains unchanged for the second-quarter of 2012 at 39 cents over the last 7 or 30 days.

Positive Earnings Surprise History

With respect to earnings surprises, Cabela's has topped the Zacks Consensus Estimate over the last four quarters in the range of 7.1% to 21.2%, with the average at 15.1%. Looking at the past performances, we expect Cabela’s to outperform in the coming quarters.

Conclusion

Cabela's next generation store format, multi-channel strategy and seasonal product assortments enable it to focus on increasing its stores’ productivity and sales per square foot while lowering labor costs.

Cabela's multi-channel model facilitates consumers to purchase directly from retail stores or order products through catalog and Internet channels, and have them delivered to the retail store of their choice, without incurring shipping costs. This multi-channel approach gives the company an advantage over its competitors.

In order to capitalize on the under-penetrated markets, the company unveiled its new ‘Outpost’ store format spanning 40,000 square feet that adopts a "core-flex" merchandise strategy (selected core assortment of products and flexible seasonal merchandise).

Based on sturdy balance sheet, feasible strategy and operating efficiencies, Cabela's, which competes with Wal-Mart Stores Inc. ( WMT - Analyst Report ) and Target Corporation ( TGT - Analyst Report ) , carries a Zacks #2 Rank implying short-term Buy rating, and we maintain our long-term Outperform recommendation on the stock.