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What to Expect from Cabela's (CAB) This Earnings Season?

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We expect specialty retailer Cabela's IncorporatedCAB to beat expectations when it reports third-quarter 2015 results on Oct 22, before the opening bell.

Why a Likely Positive Surprise?

Our proven model shows that Cabela's is likely to beat estimates because it has the right combination of two key components.

Zacks ESP: Cabela's currently has an Earnings ESP of +1.37%. This is because the Most Accurate estimate is at 74 cents, while the Zacks Consensus Estimate is 73 cents.

Zacks Rank: Cabela's carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Ranks #1, #2 and #3 have a significantly higher chance of beating estimates. The sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of Cabela's Zacks Rank #3 and +1.37% ESP makes us confident of an earnings beat.

What is Driving the Better-than-Expected Results?

In spite of a soft second quarter, management remains confident of the company's performance in the second half of 2015. This optimism is based on solid results witnessed in most merchandise categories, sequential improvement in comps, expected stability in merchandise margin, and cost-containment efforts.

Consequently, the company reiterated its sales and earnings guidance for 2015. Cabela's still anticipates revenues to improve at a low double-digit rate and earnings per share to grow in a high single-digit to low double-digit range.

However, management cautioned that the third quarter may be adversely impacted by incentive compensation of approximately $90 million that might hurt the bottom line by 5-10 cents per share.

The strong performance of Cabela's CLUB and next-generation stores should cushion its top and bottom line results in the third quarter. Considering these factors, we believe Cabela's is on track to deliver an upbeat performance.

Other Stocks to Consider

Cabela's is not the only firm looking up this earnings season. We also see likely earnings beats coming from these three retail peers:

American Eagle Outfitters, Inc. AEO has an Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).

L Brands, Inc. LB has an Earnings ESP of +2.08% and a Zacks Rank #3.

The Children's Place, Inc. PLCE has an Earnings ESP of +1.54% and a Zacks Rank #3.

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AMER EAGLE OUTF (AEO): Free Stock Analysis Report

CABELAS INC (CAB): Free Stock Analysis Report

CHILDRENS PLACE (PLCE): Free Stock Analysis Report

L BRANDS INC (LB): 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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