Will Cabela's (CAB) Earnings Fall Shy Of Estimates In Q3?

Cabela's Incorporated (NYSE:CAB) , a specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise, is scheduled to report third-quarter 2016 results on Oct 27. The question lingering in investors’ minds now is whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, it surpassed the Zacks Consensus Estimate by an average of 3.4%. However, in the last quarter, it missed the Zacks Consensus Estimate by 3.3%. Let’s see how things are shaping up for this announcement.

Unlikely to Beat Estimates

Our proven model does not conclusively show that Cabela's is likely to beat earnings estimates 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. Cabela's has an Earnings ESP of -1.25% as the Most Accurate estimate stands at 79 cents, while the Zacks Consensus Estimate is pegged higher at 80 cents. The company carries a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing this Quarter

Cabela’s multi-channel model, next-generation stores and cost-saving initiatives is likely to have a favorable impact in the quarter to be reported. Moreover, the next-generation stores are outperforming Cabela’s legacy stores in terms of both sales and profit per square foot. We remain optimistic about these store formats as they require less capital investment, enhance store productivity and help increase sales per square foot.

Soft economic recovery, deceleration in the sale of sporting goods along with stiff competition from both brick & mortar and e-commerce businesses are making things tough for Cabela’s. Moreover, the company’s expansion in the geographies where it already serves has boomeranged, consequently cannibalizing sales and leading to lower traffic count at existing stores.

Cabela's has been exploring strategic alternatives, including a potential sale, after it came under pressure from an activist fund, Elliot Management. Recently, it accepted the buyout offer of Bass Pro Shops of an all-cash deal valued at $5.5 billion.

CABELAS INC Price and EPS Surprise

CABELAS INC Price and EPS Surprise | CABELAS INC Quote

Stocks Poised to Beat Earnings Estimates

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

Avon Products Inc. (NYSE:AVP) has an Earnings ESP of +33.33% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marinemax Inc. (NYSE:HZO) has an Earnings ESP of +31.82% and also flaunts a Zacks Rank #1.

Big Lots Inc. (NYSE:BIG) has an Earnings ESP of +50.00% and carries a Zacks Rank #2.

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