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Cabela’s Top Line Rose in Fiscal 1Q16: What’s Next?

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Price movement: Cabela’s

Cabela’s (CAB) has a market cap of $3.6 billion. CAB rose 0.17% to close at $52.28 per share on April 28. The stock’s weekly, monthly, and year-to-date price movements were -0.02%, 7.1%, and 11.6%, respectively, as of the same day. CAB is trading 4.3% above its 20-day moving average, 7.7% above its 50-day moving average, and 14.7% above its 200-day moving average.

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Related ETF and peers

The SPDR S&P Retail ETF (XRT) invests 1.1% of its holdings in Cabela’s. The ETF tracks a broad-based, equal-weighted index of stocks in the US retail industry. XRT’s year-to-date price movement was 3.9% as of April 28.

Cabela’s competitors’ market caps are as follows:

  • DICK’s Sporting Goods (DKS)—$5.4 billion
  • Best Buy Company (BBY)—$10.6 billion
  • Lowe’s Companies (LOW)—$69.1 billion

Cabela’s performance in fiscal 1Q16

Cabela’s reported fiscal 1Q16 total revenue of $864.7 million, a rise of 4.5% compared to total revenue of $827.1 million in fiscal 1Q15. Revenue from merchandise sales and financial services rose 3.2% and 14.6%, respectively, in fiscal 1Q16 compared to fiscal 1Q15. The company reported impairment and restructuring charges of $3.0 million in fiscal 1Q16.

Its net income and earnings per share fell to $22.9 million and $0.33, respectively, in fiscal 1Q16 from $26.8 million and $0.37, respectively, in fiscal 1Q15. It reported adjusted earnings per share of $0.43 in fiscal 1Q16, a rise of 13.2% from fiscal 1Q15.

Cabela’s cash and cash equivalents fell 54.9%, and its inventories rose 10.5% in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio and debt-to-equity ratio fell to 2.5x and 3.3x, respectively, in fiscal 1Q16 from 2.6x and 3.6x in fiscal 4Q15.

The company announced plans to expand its retail footprint to McDonough, Georgia, and Lee’s Summit, Montana.

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  • Michael Copeland, executive vice president and chief operating officer, is now working in a strategic advisory role.
  • Scott K. Williams has been appointed as president. He’ll take on responsibility for US retail and all operations in Canada.
  • The variable funding facility with Bank of America, National Association (BANA), has extended through March 2019 with an increased commitment of $500 million from $300 million.

Projection

The company has made the following projections for fiscal 2016.

  • revenue growth in a high single digits
  • earnings per share in high single digit or low double digits

Cabela’s competitors

DICK’s Sporting Goods (DKS) reported fiscal 4Q15 net sales of $2,240.1 million, a rise of 3.7% from $2,160.0 million in fiscal 4Q14. It reported earnings per share of $1.13 in fiscal 4Q15, a fall of 13.1%.

Best Buy (BBY) will release its fiscal 1Q17 results on May 24. In fiscal 4Q16, the company reported revenue and earnings per share of $13,623.0 million and $1.40, respectively, a fall of 4.2% and 4.1% from fiscal 4Q15.

Lowe’s Companies (LOW) will release its fiscal 1Q16 results on May 18. In 4Q15, the company reported net sales of $13,236.0 million, a rise of 5.6% from fiscal 4Q14. It reported earnings per share of $0.01 in fiscal 4Q15 compared to $0.46 in fiscal 4Q14.

In the next part of this series, we’ll compare Cabela’s with its peers and ETFs.

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