Why Cabela's (CAB) Is Falling Today

NEW YORK (TheStreet) -- Cabela's (CAB) was falling 12% to $61.41 on Thursday after failing to meet analysts' expectations for fourth-quarter earnings and revenue. 

The sporting goods company posted earnings of $1.32 a share in the quarter. Analysts surveyed by Capital IQ called for $1.41 a share. Revenue rose 6.1% to $1.19 billion in the quarter; analysts expected revenue of $1.2 billion.

For the first quarter, Cabela's said it expects earnings of between 32 cents and 42 cents a share. Analysts call for earnings of 57 cents a share. .

The company expects earnings growth in the high single digits to low double digits for the full year of 2014. Analysts expect earnings of $3.82 a share for the year, or 15% growth from 2013.

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TheStreet Ratings team rates CABELAS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate CABELAS INC (CAB) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CAB's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CABELAS INC has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CABELAS INC increased its bottom line by earning $2.42 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($3.42 versus $2.42).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 16.6% when compared to the same quarter one year prior, going from $42.79 million to $49.89 million.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 36.11% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 44.66% is the gross profit margin for CABELAS INC which we consider to be strong. Regardless of CAB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.87% trails the industry average.

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