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Cracker Barrel (CBRL) Beats on Q2 Earnings, Raises EPS View

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Cracker Barrel (CBRL) Beats on Q2 Earnings, Raises EPS View

Cracker Barrel's (CBRL) sales-building initiatives favored comps growth and the overall top line in the second-quarter of fiscal 2018.

Cracker Barrel Old Country Store, Inc. CBRL reported better-than-expected results in second-quarter fiscal 2018.

Earnings per share (EPS) of $2.73 surpassed the Zacks Consensus Estimate of $2.42 by 12.8%. EPS also increased 24.7% year over year on growth in net income driven by tax benefits.

Quarterly revenues of $787.8 million surpassed the consensus estimate of $787 million by a narrow margin and grew 2% from the prior-year quarter. Revenues were favored by positive comps and restaurant openings.

Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise


Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise | Cracker Barrel Old Country Store, Inc. Quote

Shares did not move in after-hours trading, following the earnings release on Feb 20. However, Cracker Barrel’s shares have rallied 7.3% in the past six months, outperforming the industry’s gain of 1.9%.

While the company’s sales-building initiatives favored comps growth and the overall top line, expenses related to implementation of these initiatives and commodity inflation remain a concern.

Let’s delve deeper into the numbers.

Comps Details

Comparable store restaurant sales increased 1.1% in the quarter, including a 2% increase in average check, partially offset by a 0.9% decrease in store traffic. The figure compared favorably with 0.2% increase in first-quarter fiscal 2018. Notably, the average menu price increase was close to 2.3%.

Comparable store retail sales in the fiscal second quarter increased 0.5%, slightly better than the 3.6% decline recorded in the last quarter.

Operating Highlights

Operating income in the second quarter was $76.7 million, a fall from the year-ago quarter’s $82.7 million. Resultantly, operating margin in the reported quarter was 9.7%, down 100 basis points (bps) from 10.7% a year ago.

Net income was $91.1 million in the quarter, reflecting a 72.9% increase from the prior-year quarter’s net income of $52.7 million.

Balance Sheet

As of Jan 26, 2018, cash and cash equivalents were $168.8 million, up from $161 million as of Jul 28, 2017 (end of fiscal 2017 fourth-quarter). Long-term debt remained $400 million in the second quarter, flat from the prior quarter value.

Inventory, at the end of the second quarter, amounted to $159.6 million, up from $156.4 million in fourth-quarter of fiscal 2017.

Cash flows from operating activities as of Jan 26, 2018, was $148.5 million, compared with $320.8 million as of Jul 28, 2017.

Third-Quarter EPS Outlook

For third-quarter fiscal 2018, management expects EPS between $1.85 and $1.85.

2018 Guidance

For fiscal 2018, the company expects adjusted EPS in the range of $9.30-$9.50, up from the previous band of $8.75-$8.90. The guidance was lifted on account of benefits from the change in tax rate.

Total revenues of roughly $3.1 billion are expected, reflecting the anticipated opening of eight or nine new Cracker Barrel stores and three new Holler & Dash Biscuit House restaurants. The company maintained its revenue guidance.

The guidance also takes into consideration a projected increase in comparable store restaurant sales of 1% to 2% (lower than the previously guided range of 2% to 3%). Comparable store retail sales are expected to remain flat as before.

Operating margin as a percentage of revenues is expected to be within 9.5-10%, down from previously guided 10.5%. Capital expenditures are still anticipated in the band of $150 million to $160 million.

Zacks Rank & Peer Releases

Cracker Barrel carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chipotle Mexican Grill CMG posted fourth-quarter 2017 results, with adjusted EPS of $1.34, surpassing the consensus estimate of $1.32 by 1.5%. EPS also grew 143.6% year over year on lower costs and higher revenues.

McDonald's MCD reported fourth-quarter 2017 adjusted EPS of $1.71, beating the consensus mark of $1.59 by 7.5%. EPS improved 19% from the year-ago quarter (16% at constant currency). The upside reflects strong operating performance and G&A savings.

Dunkin' Brands’ DNKN fourth-quarter 2017 adjusted EPS of 64 cents beat the Zacks Consensus Estimate of 63 cents.  Earnings, however, stayed flat year over year, as a decline in adjusted net income was offset by decline in shares outstanding.

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