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Does Cracker Barrel Old Country Store, Inc.'s (NASDAQ:CBRL) -8.6% Earnings Drop Reflect A Longer Term Trend?

Simply Wall St

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After looking at Cracker Barrel Old Country Store, Inc.'s (NASDAQ:CBRL) latest earnings announcement (01 February 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Cracker Barrel Old Country Store's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

See our latest analysis for Cracker Barrel Old Country Store

Despite a decline, did CBRL underperform the long-term trend and the industry?

CBRL's trailing twelve-month earnings (from 01 February 2019) of US$218m has declined by -8.6% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which CBRL is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and whether the whole industry is facing the same headwind.

NasdaqGS:CBRL Income Statement, May 29th 2019

In terms of returns from investment, Cracker Barrel Old Country Store has invested its equity funds well leading to a 35% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the US Hospitality industry of 6.1%, indicating Cracker Barrel Old Country Store has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Cracker Barrel Old Country Store’s debt level, has increased over the past 3 years from 23% to 24%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 82% to 64% over the past 5 years.

What does this mean?

Cracker Barrel Old Country Store's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Cracker Barrel Old Country Store to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CBRL’s future growth? Take a look at our free research report of analyst consensus for CBRL’s outlook.
  2. Financial Health: Are CBRL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 01 February 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.