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Bull of the Day: Cabela's (CAB)

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Cabela's (CAB) surprised Wall Street recently when it announced first quarter EPS guidance that blew away the Zacks Consensus Estimate as growth remained strong across most of its product categories. This Zacks Rank #2 (Buy) is expected to post another year of double digit earnings growth in 2013.

Cabela's is more than just a retailer that sells hunting, fishing, and camping merchandise. It only has 35 stores in the U.S. and Canada but customers have been known to drive vast distances to go to a store.

The larger legacy stores are built like large log cabins and have unique features such as in-house restaurants, some which serve wild boar, trophy animal mounts displayed on indoor mountains and big aquariums filled with fish.

You don't just go to Cabela's to shop. You go there for the experience. When a new store opens, it's a big event. It's not unusual to see 10,000 to 15,000 people show up at a grand opening.

The Web Experience To Improve

Cabela's ecommerce and catalog business has been struggling in recent years but the last two quarters has seen a turnaround. While half of the recent direct sales growth came from ammunition sales, women's and children's apparel also saw strong sales so it's not ALL guns and ammunition.

Cabela's is focusing on bringing the store experience to customers that don't have one nearby and aren't willing to drive to one. It has a bunch of initiatives to improve its online experience which it will start instituting this year.

Cabela's foresees itself rolling out 10 to 12 new stores a year and is focusing on opening stores where online sales and catalog orders are the strongest. That's why it will be opening its first store in the Southeast in South Carolina and its first in Alaska in 2014.

New First Quarter Guidance Blows Away the Zacks Consensus

But it was the company's new first quarter guidance, issued on Mar 12, that really got the analysts excited about 2013. Ahead of an analyst meeting, Cabela's said that the strong growth trends it saw in the fourth quarter had continued into 2013. It expected first quarter earnings to be 10 to 15 cents above the analysts' consensus estimates.

Not surprisingly, in the week since the new guidance was issued, 4 estimates have been revised higher for the first quarter. That has pushed the Zacks Consensus up to 52 cents from 45 cents before the announcement.

The analysts have also been raising their full year estimates to reflect the new optimism. 6 estimates were raised in the prior 7 days which pushed the Zacks Consensus up to $3.24 from $3.09. That is earnings growth of 14.8%.

Cabela's has seen double digit earnings growth every year since 2010.

Shares Hit New Multi-Year Highs

As soon as the guidance announcement hit, shares shot up to new 3-year highs. You're paying 19x forward estimates for the double digit growth.

If you're looking for a retailer with a unique brand, look no further than Cabela's.

[In full disclosure, the author of this article owns shares of Cabela's.]

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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