Bass Pro/Cabela’s: Calm Before the Storm?

Things are quiet … maybe too quiet.

Since we first reported that Bass Pro Shops was in the market to purchase Cabela’s things have quieted, but forces are apparently still moving to effectuate the biggest retail shakeup the fishing world has ever seen.According to LowCards.com, a credit card news outlet, “Cabela’s is trying to sell its profitable credit card sector before selling off the company altogether.” The report maintains that Bass Pro Shops is not interested in Cabela’s credit card portfolio despite the fact that credit card sales represent about 30 percent of Cabela’s transactions (reportedly $1.08 billion). Those are huge dollars and a big part of the Cabela’s operation, but the credit card operation has been fraught with challenges in recent years.

In April of 2014, the credit card bank operated by Cabela’s World’s Foremost Bank) was fined $1 million by the Federal Deposit Insurance Corp. (FDIC) and ordered to pay millions in restitution to cardholders for “deceptive and unfair acts.” Three years earlier, World’s Foremost Bank had to pay $10.4 million in fines for improper card fees.

Cabela’s is expected to release a financial report on or around Feb. 18. For the quarter that closed on Sept. 30, 2015, the company reported earnings per share (EPS) of $0.71. That figure is expected to rise to about $1.21. Cabela’s shares closed at $40.14 on Jan. 28, but Wall Street analysts set its short-term price target at $47.666 and its projected price range for the coming year between $56 and $36.

Zacks Investment Research has a stock rating system (Average Broker Rating) that factors in a wide variety of investor considerations to score a publicly traded company on a scale of one (Strong Buy) to five (Strong Sell). Currently, Cabela’s (NYSE:CAB) has an ABR of 2.67.

Whether the sale of Cabela’s goes through or not, is as yet uncertain. But fishing and investment industry experts speculate that it may yet take quite a while to transpire and that the odds may be against a deal ever being made.