Why Is Cracker Barrel (CBRL) Up 9.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Cracker Barrel Old Country Store (CBRL). Shares have added about 9.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cracker Barrel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cracker Barrel Q2 Earnings & Revenues Beat Estimates
Cracker Barrel reported second-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top increased year over year while the bottom line declined from the prior-year quarter figure.
The company expects ongoing margin challenges in the short term, particularly in the upcoming fiscal third quarter.
Earnings & Revenues
In second-quarter fiscal 2024, the company reported adjusted earnings per share (EPS) of $1.37, beating the Zacks Consensus Estimate of $1.29. In the prior-year quarter, it reported adjusted EPS of $1.48.
Quarterly revenues of $935.4 million beat the consensus mark of $916 million. The top line inched up 0.2% year over year. Sequential improvements in traffic primarily backed the upside. Also, guest experience enhancements and marketing optimizations added to the positives.
Comps Details
Comparable store restaurant sales increased 1.2% in the reported quarter compared with the same period in fiscal 2023. Comparable store retail sales declined 5.3% year over year. During the quarter, menu pricing increases came in at 4.8% year over year.
Operating Highlights
During the fiscal second quarter, the cost of goods sold (excluding depreciation and rent) came in at $314.9 million, down 4% year over year. As a percentage of total revenues, the cost of goods sold (excluding depreciation and rent) fell 130 basis points (bps) year over year to 33.7%. Per our model, the metric was anticipated at 32.7%.
General and administrative expenses totaled $52.5 million, down from $45.5 million reported in the prior-year quarter. Our projection for the metric was $47.4 million.
Adjusted operating income in the fiscal second quarter totaled $36 million, down from $55 million reported in the year-ago quarter. Our projection for the metric was $35.6 million.
Adjusted operating margin was 3.8%, down 70 bps from the prior-year quarter’s levels. The downside was mainly due to a rise in labor and related expenditures, other operating expenses and general and administrative costs. The lower cost of goods sold partially offset this.
Balance Sheet
As of Jan 26, 2024, cash and cash equivalents were $12.6 million compared with $49.4 million as of Jan 27, 2023.
Inventory at the fiscal second-quarter end reached $172.7 million compared with $187.3 million reported in the prior-year period.
Long-term debt as of Jan 26, 2024, was $452.3 million compared with $454.1 million as of Jan 27, 2023.
CBRL declared a cash dividend of $1.30 per share. The dividend will be paid out on May 7, 2024, to shareholders on record as of Apr 12, 2024.
2024 Guidance
For fiscal 2024, the company expects revenues in the range of $3.5-$3.6 billion compared with the previous expectation of $3.4-$3.5 billion. Adjusted operating income is anticipated to be between $125 and $135 million.
Management projects commodity inflation in the range of 0% to 2%. Hourly wage inflation is suggested to be nearly 5%.
Coming to store openings, CBRL aims to open two new Cracker Barrel units and nine-11 new Maple Street Biscuit company units during the fiscal year. Capital expenditures during the year are envisioned in the range of $120-$135 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -22.45% due to these changes.
VGM Scores
Currently, Cracker Barrel has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cracker Barrel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cracker Barrel is part of the Zacks Retail - Restaurants industry. Over the past month, Domino's Pizza (DPZ), a stock from the same industry, has gained 10.3%. The company reported its results for the quarter ended December 2023 more than a month ago.
Domino's Pizza reported revenues of $1.4 billion in the last reported quarter, representing a year-over-year change of +0.8%. EPS of $4.48 for the same period compares with $4.43 a year ago.
Domino's Pizza is expected to post earnings of $3.46 per share for the current quarter, representing a year-over-year change of +18.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.
Domino's Pizza has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
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