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Cabela's (CAB) Continues to Plunge: Should You Dump It?

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Shares of Cabela's IncorporatedCAB have declined more than 11% in the past six months owing to disappointing second and third-quarter 2015 financial numbers. It is quite evident that Cabela's is no longer a favorite pick for investors. Let's delve a little deeper to find out the reasons.

Cabela's disappointed investors with weaker-than-expected results in two consecutive quarters. The company's third-quarter 2015 earnings per share of $0.71 missed the Zacks Consensus Estimate by a couple of cents and also plunged 12.3% from the prior-year quarter. The dismal quarterly numbers were primarily attributable to weakness in the company's fall apparel and footwear business, which overshadowed robust performances of the merchandise and Cabela's CLUB businesses.

The underperformance compelled management to lower its guidance for 2015. This Zacks Rank #5 (Strong Buy) company now expects revenues to improve at a high single-digit rate instead of its previous estimate of low double-digit rate. The company envisions 2015 earnings per share to remain flat with that of $2.88 in 2014. However, the latest projection lies below the company's previous estimate of earnings growth in the high single-digit to low double-digit range.

Following Cabela's discouraging performance and dull outlook, the Zacks Consensus Estimate for the stock also moved south. Analysts polled by Zacks are now less constructive on the stock's future performance. Over the past 60 days, the Zacks Consensus Estimate of $2.87 and $3.22 per share for fiscal 2015 and fiscal 2016 declined 6.5% and 8.3%, respectively. Moreover, the Zacks Consensus Estimate for the fourth quarter has plummeted 12.9% to $1.22 per share over the same time frame.

Stocks to Consider

Some better-ranked stocks in the retail sector are Republic Services, Inc. RSG , CST Brands, Inc. CST and ULTA Salon, Cosmetics & Fragrance, Inc. ULTA . Republic Services sports a Zacks Rank #1 (Strong Buy), whereas CST Brands and ULTA Salon, Cosmetics & Fragrance hold a Zacks Rank #2 (Buy).

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CABELAS INC (CAB): Free Stock Analysis Report

REPUBLIC SVCS (RSG): Free Stock Analysis Report

ULTA SALON COSM (ULTA): Free Stock Analysis Report

CST BRANDS INC (CST): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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