Looking at Cracker Barrel Old Country Store Inc’s (NASDAQ:CBRL) earnings update in August 2018, it seems that analyst forecasts are fairly bearish, with earnings expected to decline by -13% in the upcoming year against the past 5-year average growth rate of 15%. Currently with a railing-twelve-month profit of US$248m, the consensus growth rate suggests that earnings will drop to US$217m by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will Cracker Barrel Old Country Store perform in the near future?
The view from 9 analysts over the next three years is one of negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CBRL’s earnings growth over these next few years.
By 2021, CBRL’s earnings should reach US$222m, from current levels of US$248m, resulting in an annual growth rate of -2.7%. This leads to an EPS of $9.31 in the final year of projections relative to the current EPS of $10.31. The primary reason for earnings contraction is due to cost growth exceeding top-line growth of 1.5% in the next three years. With this high cost growth, margins is expected to contract from 8.2% to 7.1% by the end of 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Cracker Barrel Old Country Store, there are three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Cracker Barrel Old Country Store worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cracker Barrel Old Country Store is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cracker Barrel Old Country Store? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.