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Cracker Barrel (CBRL) Down 35% in Past Year: Is Revival Likely?

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Shares of Cracker Barrel Old Country Store, Inc. CBRL have been hit hard by the coronavirus pandemic and high costs. The stock has plunged 34.8% in the past year, compared with the industry's decline of 20.6%.

However, the company has been showing some resilience of late, with the stock gaining 7.1% in the past five trading sessions. In the past 60 days, earnings estimates for the current quarter have moved north by 2.4% to $6.86. The company has an impressive long-term earnings growth rate of 9.4%. Let's delve deeper and analyze the factors likely to drive the Zacks Rank #2 (Buy) company's performance. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Key Growth Drivers

Cracker Barrel’s continuous expansion strategies are helping the company to drive growth. In fiscal 2018, the company unveiled its first California location. Although the pandemic is likely to hamper the progress, the company is bullish on its business model and growth potential. It is encouraging to note that Maple Street delivered significant sales growth, with sequential improvements in average weekly sales for each month during second-quarter fiscal 2022. The company expects to open 11 new Maple Street biscuit company locations and two new Cracker Barrel locations in fiscal 2022.

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Zacks Investment Research


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The company intends to meet consumers' need for convenience via growth in its off-premise business. In fact, Cracker Barrel plans to enhance its off-premise platform by introducing a catering menu offering and in-store training of hourly employees. It continues to invest in technology initiatives to enhance guests' experience. To this end, the company plans to roll out Pay in App that allows contactless payments via mobile devices. It is initiating the launch of the digital store that enhances the customer experience for ordering food and retail. Investments in this direction are likely to boost its hospitality service along with customer experience in a brand new way.

During the fiscal second quarter, comparable store off-premise sales soared by 123% from 2019 levels. It contributed 24% to the quarterly restaurant sales. Going forward, the company expects to retain at least 60% of the growth through emphasis on order-fulfillment improvements and to expand guest engagement (through its digital platform). To support this, CBRL continues to focus on enhancing its curbside pickup process, improving the integration between off-premise applications and processes (with the back of house technology) and streamlining processes.

To address the challenges of the competitive restaurant industry, Cracker Barrel undertakes extensive marketing efforts, mainly focusing on the brand’s differentiation, menu offering and value. In order to drive traffic, Cracker Barrel relies heavily on seasonal promotions and limited-time offers to boost its top-line performance as they are appealing to both regular users and less-frequent guests.

Other Key Picks

Some other top-ranked stocks in the Zacks Retail-Wholesale sector are MarineMax, Inc. HZO, BBQ Holdings, Inc. BBQ and Potbelly Corporation PBPB.

MarineMax sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 32.8%, on average. Shares of the company have declined 23.8% in the past year.

The Zacks Consensus Estimate for MarineMax’s 2022 sales and EPS suggests growth of 16% and 21.5%, respectively, from the year-ago period’s levels.

BBQ Holdings carries a Zacks Rank #2. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 18.3% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.

Potbelly carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.2%, on average. Shares of the company have declined 25.5% in the past year.

The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 14.1% and 88.5%, respectively, from the year-ago period’s levels.


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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
 
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