Barron's suggests it's smart to cash in before a Cabela's sale takes the gold out of the granola.
Investors in Cabela’s may want to lock in profits before the hunting and fishing equipment store chain sells itself or its various assets, according to a report in the latest edition of the financial publication Barron’s.
Barron’s said its analysis suggests a sale is unlikely to bring a significant premium above the current share price, and shareholders should consider taking advantage of a recent run-up based on takeover speculation.
Cabela’s CAB shares closed at $51.99 on the New York Stock Exchange on Friday after trading as low as $39 in February.
A New York Post report last week said final bids are expected by the end of the month for Cabela’s real estate, credit card business, and retail operations. Reuters in April reported that privately held outdoor retailer Bass Pro Shops had partnered with Goldman Sachs Group’s private equity arm to make a bid for Cabela’s.
Without some $200 million in credit card fees last year, Cabela’s would have had an operating loss, Barron’s said, adding that it was unclear if a bidder for the credit card business would continue the current “generous deal” it now has with the stores.
Any deals for Cabela’s parts may add up to less than what public investors are now paying for the shares, the report cautioned.