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Factors Likely to Influence Cabela's (CAB) Earnings in Q2

Cabela's Incorporated CAB, a specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise, is scheduled to report second-quarter 2017 results on Aug 3. In the preceding quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 11.1%. Notably, the company’s earnings have lagged the estimate by 10% in three of the trailing four quarters. Let’s see how things are shaping up for this announcement.

What to Expect?

The question lingering in investors’ minds now is whether Cabela's will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 57 cents, reflecting a year-over-year decline of over 3%. We note that the Zacks Consensus Estimate witnessed have been stable in the past 30 days. Analysts polled by Zacks expect revenues of $912 million, down 1.9% from the year-ago quarter.

We noted that the stock has outperformed the industry in the past six months. The company’s shares have gained 5%, while the industry has witnessed a decline of 9.2%.

Factors at Play

Cabela’s multi-channel model, next-generation stores and cost-saving initiatives bode well. Moreover, the next-generation stores are outperforming Cabela’s legacy stores in terms of both sales and profit per square foot. We remain optimistic about these store formats as they require less capital investment, while enhancing store productivity and sales per square foot.

We believe that the company’s Financial Services Business segment plays an integral role in supporting the merchandising business by encouraging customer loyalty rewards program that provides a boost to revenues, profitability and customer retention at Retail as well as Direct businesses. In the previous quarter, Financial services revenues increased 6.5% to approximately $150 million, reflecting advancement in interest and fee income, primarily offset by an increase in the provisional losses for loans and interest expenses.

However, soft economic recovery, deceleration in the sale of sporting goods, along with stiff competition from both brick-and-mortar and eCommerce has made things difficult for Cabela’s, which accepted the buyout offer of Bass Pro Shops. Moreover, dismal top-line performance for the third consecutive quarter is a major concern for the investors.

Unlikely to Beat Estimates

Our proven model does not conclusively show that Cabela's is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Cabela's has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 57 cents. The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Cabela's Inc Price, Consensus and EPS Surprise

Cabela's Inc Price, Consensus and EPS Surprise | Cabela's Inc Quote

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.

Kellogg Company K has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Molson Coors Brewing Company TAP has an Earnings ESP of +4.90% and a Zacks Rank #3.

Under Armour, Inc. UAA has an Earnings ESP of +16.67% and a Zacks Rank #3.

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Molson Coors Brewing Company (TAP): Free Stock Analysis Report
 
Kellogg Company (K): Free Stock Analysis Report
 
Cabela's Inc (CAB): Free Stock Analysis Report
 
Under Armour, Inc. (UAA): Free Stock Analysis Report
 
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