In a move to supplement its Financial Services Segment,
Cabela's Inc
. (
CAB
) recently announced that its Credit Card Master Note Trust has
concluded the sale of Asset-Backed Notes worth $500 million.
The company distributed the issuance into three parts: $300
million of Class A-1 Notes carrying a fixed rate of 1.45% per
annum, $125 million of Class A-2 Notes with a floating rate
interest equal to one-month LIBOR along with 0.48% per annum, and
the company sold three subordinated classes of notes totaling $75
million. World's Foremost Bank, a wholly-owned subsidiary of the
company, procured each of the subordinated classes of notes.
Corporate issuances are in high demand, which in turn, led the
company to increase the transaction by $200 million. U.S.
treasuries are yielding low rates, driving investors toward the
notes issued by sound companies.
The issued notes have a maturity period of roughly five years,
with legal maturity of eight years. The move will boost its
financial services segment and will escalate the growth of the
credit card portfolio of the World's Foremost Bank.
The company's Financial Services Business segment plays an
integral part in supporting the merchandising business by
encouraging customer loyalty rewards program that will result in
increase in revenue, profitability and customer retention at its
Retail and Direct businesses, leading to overall growth in sales
and earnings.
Boasting a solid balance sheet, feasible strategy, operating
efficiencies and healthy product demand, Cabela's offers its
investors one of the strongest growth profiles. Moreover, the
company remains confident about achieving its targeted long-term
return on invested capital of 12% to 14%.
Further, Cabela's CLUB Visa program continues to register solid
growth, reflecting increase in average active accounts with
enhancements in delinquencies and net charge-offs along with lower
funding cost.
However, the outdoor recreation and casual apparel and footwear
markets are highly fragmented and competitive. Cabela's faces stiff
competition from discount stores such as
Wal-Mart Stores Inc
. (
WMT
) and
Target Corporation
(
TGT
).
Currently, we maintain a long-term Outperform rating on
Cabela's. However, the company holds a Zacks #2 Rank, which
translates into a short-term Buy recommendation.
CABELAS INC (CAB): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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