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Why Is Cracker Barrel (CBRL) Down 5.7% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Cracker Barrel Old Country Store (CBRL). Shares have lost about 5.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cracker Barrel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Cracker Barrel Q4 Earnings & Revenues Top Estimates

Cracker Barrel Old Country Store reported better-than-expected fourth-quarter fiscal 2019 results. With this, the company’s earnings surpassed the Zacks Consensus Estimate for the fourth straight quarter.

Adjusted earnings came in at $2.70 per share, which outpaced the Zacks Consensus Estimate of $2.43. The bottom line also increased 23.3% year over year.

Revenues of $787.1 million surpassed the consensus mark of $774 million but declined 3% from the prior-year quarter. The downside was primality due to the inclusion of the 53rd week in the prior-year quarter.

Comps Details

Comparable store restaurant sales increased 3.8% in the reported quarter, courtesy of a 3.6% uptick in average check and a 0.2% increase in comparable store restaurant traffic. Also, the average menu price rose about 2.3%. Moreover, comps compared favorably with the third quarter’s 1.3% rise.

Comparable store retail sales in the fiscal fourth quarter rose 0.4% compared with a 2.6% decline in the third quarter.

Operating Highlights

Operating income in the fiscal fourth quarter totaled $79.4 million, down 4% year over year. Operating margin was 10.1%, down 10 basis points from the prior-year quarter.

As a percentage of total revenues, rise in other operating expenses, and general and administrative expenses were overshadowed by a decline in cost of goods sold and labor and other related expenses.

Balance Sheet

As of Aug 2, 2019, cash and cash equivalents were $36.9 million, down from $114.7 million as of Aug 3, 2018. Long-term debt remained at $400 million in the reported quarter, in line with the prior-year quarter.

Inventory at the end of the quarter under review amounted to $155 million, down from fourth-quarter fiscal 2018 value of $156.3 million.

Net cash provided by operating activities was $362.8 million as of Aug 2, 2019, compared with $330.6 million as of Aug 3, 2018.

Fiscal 2019 Guidance

Cracker Barrel expects total revenues in the range of $3.15-$3.2 billion. Comparable store restaurant sales and retail sales are expected to grow 2-3%. The company also aims to open six Cracker Barrel stores in fiscal 2019.

Management continues to project earnings per diluted share of $8.8-$8.95 (including the impact of investment in Punch Bowl Social) for fiscal 2020 compared with $9.27 in fiscal 2019.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -8% due to these changes.

VGM Scores

At this time, Cracker Barrel has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Cracker Barrel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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