Will Cabela's (CAB) Beat Q3 Earnings on Sales Upturn? - Analyst Blog

Cabela's Incorporated (CAB), a leading outfitter of hunting, fishing and outdoor gear, is slated to report its third-quarter fiscal 2014 results on Oct 23, 2014. Last quarter, it posted a positive earnings surprise of 19.6%. Let us see how things are developing for this announcement.

Growth Factors This Quarter

Second-quarter fiscal 2014 earnings was a game changer for Cabela, which had been posting negative earnings surprises for quite some time. The company expects the momentum to continue henceforth, although it might get slightly marred by the sluggish macroeconomic environment.  

The company expects its revenue for the third quarter to show recovery, recording a high-single-digit to low-double-digit growth rate, as sales trends of ammunition, firearms and other shooting related categories have started to normalize and are expected to remain so in 2014. Management expects earnings in the range of 80–90 cents per share in the upcoming quarter, while for the full year it reaffirmed earnings growth in the high single-digit/low double-digit rate as against $3.32 recorded in 2013.

Earnings Whispers

Our proven model does not conclusively project Cabela's as likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP:  ESP for Cabela's is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 86 cents.

Zacks Rank #3: Cabela's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these to have the right combination of elements to post an earnings beat:  

L Brands Inc. (LB) Earnings ESP stands at +3.13% and it carries a Zacks Rank #2.

Home Depot Inc. (HD) with an Earnings ESP of +0.89% holds a Zacks Rank #2.

Under Armour Inc. (UA) has an Earnings ESP of +2.50% and a Zacks Rank #2.

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