Why Cabela's (CAB) Stock Is Down Today

NEW YORK (TheStreet) -- Cabela's (CAB) was falling 4.9% to $61.31 Tuesday following poor performance of Dick's Sporting Goods'  (DKS) hunting category in the first quarter.

Dick's Sport Goods said its poor first quarter results were due to poor performance of the golf and hunting categories. "In the case of hunting, we planned the business down based on last year's catalysts, but it was even weaker than expected," Dick's CEO Edward Stack said in a statement. The retailer said it expects the hunting category to perform poorly throughout the year.

As a sporting goods retailer Cabela's stock was falling following Dick's poor quarter and outlook.

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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 their recommendation:

"We rate CABELAS INC (CAB) a BUY. This is driven by some important positives, 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 expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • 43.79% 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 3.54% trails the industry average.
  • CABELAS INC's earnings per share declined by 48.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CABELAS INC increased its bottom line by earning $3.14 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($3.59 versus $3.14).
  • CAB, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 2.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.76, which shows the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: CAB Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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