Cabela's (CAB) Stock Gains on Barclays Rating
NEW YORK (TheStreet) --Share of Cabela (CAB) are climbing by 1.13% to $40.24 in early morning trading on Wednesday, after Barclays initiated coverage on the stock with an "overweight" rating and $50 price target.
The outdoor merchandise retailer recently announced an initiative to reduce expenses, and comparable same store sales could reach an inflection point due to upcoming colder weather and a likely uptick in firearm sales as hunting season approaches, the firm said in an analyst note.
Additionally, Cabela's announced a share repurchase in September, of up to $500 million of common stock, which could drive fiscal 2016 earnings growth, Barclays adds.
The company's assets include roughly $1 billion in real estate and a credit card business with a $4.5 billion receivable base, which support Barclays valuation, according to a note.
Separately, TheStreet Ratings team rates CABELAS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate CABELAS INC (CAB) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 44.47% is the gross profit margin for CABELAS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.71% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, CABELAS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Specialty Retail industry average. The net income has decreased by 18.8% when compared to the same quarter one year ago, dropping from $53.84 million to $43.71 million.
- You can view the full analysis from the report here: CAB