Cracker Barrel (CBRL) Up 1.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cracker Barrel Old Country Store (CBRL). Shares have added about 1.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is Cracker Barrel due for a pullback? 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 Q2 Earnings & Revenues Beat Estimates
Cracker Barrel delivered second-quarter fiscal 2023 (ended Jan 27, 2023) results, with earnings and revenues beating the Zacks Consensus Estimate. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure.
Cracker Barrel president and chief executive officer, Sandra B. Cochran, stated, “I am pleased with our second quarter results, as we delivered sales and operating income margin that exceeded expectations. I was especially pleased with our off-premise and retail performance. We are making great progress on key initiatives, and I believe we are well-positioned to deliver further performance improvements in the back half of the fiscal year."
Earnings & Revenues
In second-quarter fiscal 2023, the company reported adjusted earnings per share (EPS) of $1.48, beating the Zacks Consensus Estimate of $1.33. In the prior-year quarter, the company reported an adjusted EPS of $1.71.
Quarterly revenues of $933.9 million beat the consensus mark of $917 million. Also, the top line increased 8.3% year over year. The company benefited from strong retail sales growth and elevated off-premise business.
Comparable store restaurant sales rose 8.4% in the reported quarter compared with the same period in fiscal 2022. The upside was primarily backed by a 9% average menu price increase. Comparable store retail sales increased 4.1% year over year.
During the fiscal second quarter, the cost of goods sold (excluding depreciation and rent) came in at $326.6 million compared with $283.6 million reported in the prior-year quarter. As a percentage of total revenues, the cost of goods sold (excluding depreciation and rent) increased 210 basis points (bps) year over year to 35%. General and administrative expenses during the quarter came in at $45.5 million compared with $43.5 million reported in the prior-year quarter.
Adjusted operating income in the fiscal second quarter totaled $42.2 million compared with $49.8 million reported in the prior-year quarter. The adjusted operating margin was 4.5% compared with 5.8% in the prior-year quarter. The downside was mainly driven by commodity inflation and elevated retail cost of goods sold.
As of Jan 27, 2023, cash and cash equivalents were $49.4 million compared with $38.7 million as of Oct 28, 2022.
Inventory at the end of second-quarter fiscal 2023 amounted to $187.3 million compared with $231 million at the end of first-quarter fiscal 2023.
Long-term debt amounted to $454.1 million at the end of the fiscal second quarter compared with $483.7 million at the end of the previous quarter.
The company declared a cash dividend of $1.30 per share. The dividend will be paid out on May 9, 2023, to shareholders on record as of Apr 14, 2023.
Fiscal 2023 Outlook
For fiscal 2023, the company expects revenues to grow in the range of 7-9% year over year compared with the previous anticipation of the 6-8% range. During the year, the company anticipates contributions worth $25 million from cost savings and business model improvements. Adjusted operating income margin during the year is anticipated to be in the high 4% range. This includes adjusted operating income margin rate expectations of 4.3-4.7% (in third-quarter fiscal 2023) and 6.5-7% (fourth-quarter fiscal 2023), respectively.
In fiscal 2023, the company anticipates commodity inflation to be 8.5-9% (with continued inflationary pressures in categories such as produce, eggs, dairy, and grains) and wage inflation of 6.5%. Meanwhile, the effective tax rate for fiscal 2023 is anticipated at approximately 10-12%.
Coming to store openings, the company expects to open three to four new Cracker Barrel locations and 15 new Maple Street Biscuit locations in fiscal 2023. Capital expenditures during the year are anticipated in the range of $110-$120 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, Cracker Barrel has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cracker Barrel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Cracker Barrel is part of the Zacks Retail - Restaurants industry. Over the past month, Domino's Pizza (DPZ), a stock from the same industry, has gained 8.6%. The company reported its results for the quarter ended December 2022 more than a month ago.
Domino's Pizza reported revenues of $1.39 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $4.43 for the same period compares with $4.25 a year ago.
Domino's Pizza is expected to post earnings of $2.62 per share for the current quarter, representing a year-over-year change of +4.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Domino's Pizza. Also, the stock has a VGM Score of C.
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