How High Can Cabela's Fly?

Shares of Cabela's (NYSE: CAB  ) hit a 52-week high on Friday. Let's look at how it got here and whether clear skies are ahead.

How it got here
Who says the consumer isn't alive and well? Consumers who want to hunt, fish, and camp are certainly doing well, pushing Cabela's to a new high.

The company saw a strong improvement in financials in the most recent quarter. Revenue was up 11.6% to $627.3 million and same-store sales were up 4.7%. Increased margins helped push profits higher as well, with earnings per share up 52% to $0.47. This blew Wall Street's expectations out of the water.

This isn't the only sporting goods retailer moving higher, either. Dick's Sporting Goods (NYSE: DKS  ) and Hibbett Sports (Nasdaq: HIBB  ) have also enjoyed a nice move higher as the economy has recovered. It appears that those with disposable income are disposing of it in the sports arena.

CAB Chart

CAB data by YCharts

Revenue growth has been strong across the board for sporting goods companies, but Cabela's is leading this group. It also has the lowest forward P/E ratio, so upside potential is there.

Company

Price/Book

Quarterly Revenue Growth

Profit Margin

Forward P/E

Cabela's 3.1 11.6% 5.7% 17.1
Dick's Sporting Goods 3.9 10% 4.8% 17.9
Hibbett Sports 7.0 8% 8.5% 19.4

Source: Yahoo! Finance.

The big questions is: Will these trends continue?

What's next?
The top end of the consumer market is very healthy, but the bottom end isn't, which will keep a cap on Cabela's upside. I also think that expecting double-digit growth over the long term is expecting a lot from a company -- and industry -- that already has a wide footprint. I would be cautiously optimistic about Cabela's future and more inclined to buy on a dip when I could get better value.

The CAPS community is even more bullish, giving the company a four-star rating, and with 264 out of 268 All-Stars rating the stock to outperform.

Retail is a fast-moving space, and our analysts think they've found two stocks changing the future of retail. Find out which stocks they are in our free report; click here to receive it.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Dick's Sporting Goods. Motley Fool newsletter services have recommended buying shares of Cabela's. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2019176, ~/Articles/ArticleHandler.aspx, 4/16/2014 1:46:22 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement