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When Should You Buy Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)?

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·3 min read
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While Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Cracker Barrel Old Country Store’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Cracker Barrel Old Country Store

Is Cracker Barrel Old Country Store still cheap?

Cracker Barrel Old Country Store appears to be overvalued by 24% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$159 on the market compared to my intrinsic value of $128.46. This means that the opportunity to buy Cracker Barrel Old Country Store at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Cracker Barrel Old Country Store’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Cracker Barrel Old Country Store generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Cracker Barrel Old Country Store's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in CBRL’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe CBRL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CBRL for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for CBRL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Cracker Barrel Old Country Store as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for Cracker Barrel Old Country Store (2 are concerning!) that we believe deserve your full attention.

If you are no longer interested in Cracker Barrel Old Country Store, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.