D.A. Davidson Looks for Signs of Comp Stabilization for Cabela's

In a report published Tuesday, D.A. Davidson analyst Andrew Burns reiterated a Neutral rating and $54.00 price target on Cabela's (NYSE: CAB).

In the report, D.A. Davidson noted, "Our 4Q estimates for comps, revenue, and EPS are -5.0%, $1.287 billion and $1.37, compared to consensus at -5.7%, $1.265 billion and $1.35, respectively. 4Q guidance calls for high single-digit revenue growth on a mid-single digit comp decline, and EPS of $1.31- $1.41. Our estimates contemplate revenue growth of 8.3% year-over-year (y/y), driven by an 11.5% increase in Financial Services revenue, a 17.3% increase in Retail revenue, and a 10.0% decline in Direct revenue."

The report continued, "We are modeling a 31bp y/y decline in operating margin to 11.7% driven by gross margin compression (down 108bp y/y), offset partially by SG&A leverage at 29.3% of sales compared to 30.0% in 4Q13). We believe 4Q results met the lowered 4Q guidance provided in late October. During the quarter, we believe promotional activity was slightly elevated, but in line with management expectations. Weather likely spurred volatility in regional performance as Midwest weather was at times, severely cold, while western U.S. weather was unseasonably mild."

Cabela's closed on Monday at $54.73.