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Factors Setting the Tone for Cracker Barrel (CBRL) Q3 Earnings

Zacks Equity Research

Cracker Barrel Old Country Store, Inc. CBRL is scheduled to report third-quarter fiscal 2019 results on Jun 4. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 2.4%. It also delivered a bottom-line beat in three of the trailing four quarters.

How Are Estimates Faring?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $2.05, higher than $2.03 registered in the year-ago quarter. Notably, the company’s earnings estimate for the quarter has witnessed upward revisions of 2 cents. In the last reported quarter, Cracker Barrel earnings declined 7.7% on a year-over-year basis.

For revenues, the consensus mark is pinned at nearly $734 million, suggesting a 1.7% increase from the prior-year quarter reported figure.
    
Let’s delve deeper to find out how the company’s top and bottom line will shape up in the upcoming quarterly release.

Factors at Play

Cracker Barrel’s third-quarter fiscal 2019 results are likely to be driven by robust comparable restaurant sales. The company’s effort to increase off-premise sales will also provide a boost to the quarterly results. In order to drive traffic, Cracker Barrel relies heavily on seasonal promotions and limited-time offers as they are appealing to both regular users and less-frequent guests.

Additionally, Cracker Barrel is continuously focusing on rejuvenating its menu, which is the backbone of the company’s riveting growth potential. Expansion of units, extensive marketing efforts, seasonal promotions, enhanced focus on retail business along with cost-saving initiatives bode well for the company.

Despite cost-saving initiatives, higher labor costs due to increased wages are likely to dent margins. Meanwhile, management is making significant investments to support the training and launch of several initiatives as well as its value testing. Although these initiatives are expected to drive top-line growth during fiscal 2019, initial investments are likely to weigh on margin in the third quarter.

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

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

Cracker Barrel Old Country Store, Inc. price-eps-surprise | Cracker Barrel Old Country Store, Inc. Quote

What Does the Zacks Model Unveil?

Our proven model does not show that Cracker Barrel is likely to beat earnings third-quarter fiscal 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Cracker Barrel has an Earnings ESP of +0.49% and a Zacks Rank #4.  

Stocks Poised to Beat Earnings Estimates

Here are some companies in the Retail- Wholesale space, which per our model have the right combination of elements to post earnings beat in the upcoming releases:

Sonic Automotive, Inc. SAH has an Earnings ESP of +4.81% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pinduoduo Inc. PDD has an Earnings ESP of +11.77% and a Zacks Rank #3.

CarMax, Inc. KMX has an Earnings ESP of +2.80% and a Zacks Rank #3.

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