Cabela’s Inc. (CAB) analysts have been consistently raising estimates, pushing shares to a Zacks #1 Rank (Strong Buy). Combine that with the recent market correction and you have some excellent valuations as well.
Company Description
Cabela’s is a specialty retailer focusing on hunting, fishing, camping and other outdoor activities. The company has a well established catalog business as well as a growing number of retail outlets.
Topped Estimates
On Jul 28 Cabela’s reported second-quarter results that included an 8% increase in revenue, to $562 million. The company saw growth in the retail outlets but also saw a 24% gain in financial services revenue.
Net income was up 15% to a better-than-expected $22.3 million. Earnings per shares came in at $0.32, a nickel higher than the Zacks Consensus Estimate. Cabela’s has beaten the street in 8 of the past 9 quarters after meeting expectations 2 quarters ago.
Growth Rates Rising
Estimates for the full year are up 7 cents in the past couple of months, to $2.01. Next year’s forecasts are averaging $2.30, up a dime. In 2010 Cabela’s earned $1.68, so the projected growth rates are now 20% and 14%, respectively.
Given these earnings estimates, shares are trading with a P/E of 10 times and a PEG at just 0.7. Both metrics showing a good value. Shares are going for just 0.5 times sales and 1.3 times book value.
Great Earnings Trend
You can see below that the earnings estimates for CAB have never been higher, yet shares were crushed in the recent correction. Given the stock’s success and the discretionary nature of the business, it was beat up pretty good but that just creates even more value and a good time to jump in.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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