April 26, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of outdoor-gear retailer Cabela's (NYSE: CAB ) sank 10% on Thursday after its quarterly results disappointed Wall Street.
So what: Although Cabela's first-quarter top and bottom lines managed to top estimates -- EPS of $0.40 on 6% revenue growth -- disappointing online and direct sales are triggering concerns over slowing growth. In fact, revenue from its direct segment fell a steep 8.3%, suggesting that the stock's recent run-up was a bit premature.
Now what: Given the strength of its much larger retail segment, I'd look into this pullback as a possible entry point. "It is clear our strategies are working, and our retail stores are achieving superior results," said CEO Tommy Millner. "Accordingly, we continue to expect strong full year 2012 results with a meaningful portion of our first quarter over performance carrying through to our full year bottom line results." With the stock trading at a reasonable forward P/E of 13, there's plenty of room to buy into that optimism.
Interested in more info on Cabela's? Add it to your watchlist.