Cabela’s stock jumps

Associated Press, 02.20.09, 09:21 AM EST

Shares of outdoor sports equipment retailer Cabela’s Inc. jumped 17 percent in premarket trading Friday after the company’s results beat expectations and an analyst said clearance sales of firearms helped shore up the company’s balance sheet.

Thomas Weisel Partners LLC analyst Jim Duffy said in a note to investors that Cabela’s capitalized on higher store traffic to reduce inventory, helping it to reduce net debt from prior-year levels.

“On the heels of a sharp downturn in the economy and the change of administration with the November elections, strength in firearms and ammunition,” Cabela’s fourth-quarter results beat Wall Street estimates, Duffy said.

The Sidney, Neb.-based company said Thursday its fourth-quarter profit slid 12 percent, but was still above expectations. Net income fell $49.4 million to $56.2 million, or 84 cents per share. Analysts polled by Thomson Reuters predicted profit of 67 cents per share.

Meanwhile, same-store sales, or sales at stores open at least a year, rose 2.2 percent in the quarter. Same-store sales are considered a key performance indicator because they measure growth at existing stores rather than newly opened ones.

Duffy raised his 12-month price target by $1 to $8, but said he was keeping his estimates more conservative than the company’s guidance because the strength in demand for firearms may have been an anomaly based on fear regulations will change with a new administration in the White House.

He rates the stock “Peer Perform.”

Cabela’s stock rose $1.04, or 17 percent, to $7 in premarket trading after closing Thursday at $5.96.