A month has gone by since the last earnings report for Cracker Barrel Old Country Store (CBRL). Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cracker Barrel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the 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 better-than-expected results for the second quarter of fiscal 2019.
Adjusted earnings of $2.52 per share surpassed the Zacks Consensus Estimate of $2.46 by 2.4%. However, earnings declined 7.7% year over year on high expenses.
Revenues of $811.7 million surpassed the consensus mark of $811.3 million. Moreover, revenues increased 3% from the prior-year quarter, driven by higher comparable restaurant sales.
Comparable store restaurant sales increased 3.8% in the reported quarter, buoyed by a 3.7% uptick in average check and a 0.1% increase in comparable store restaurant traffic. The average menu price rose about 2.2% in the reported quarter. In fact, comps compared favorably with the fiscal first quarter’s 1.4% rise.
Comparable store retail sales in the fiscal second quarter decreased 1.4%, comparing unfavorably with 4.3% improvement recorded in the first quarter.
Operating income in the fiscal second quarter was $76.7 million, flat year over year. Operating margin in the reported quarter was 9.5%, down 20 basis points (bps) from 9.7% a year ago.
As a percentage of total revenues, cost of goods declined 40 bps and labor expenses increased 30 bps. The company witnessed rise in other operating, and general and administrative expenses.
As of Feb 1, 2019, cash and cash equivalents were $169.6 million, up from $168.8 million as of Jan 26, 2018 (end of second-quarter fiscal 2018). Long-term debt remained at $400 million in the reported quarter, in line with the prior-year quarter.
Inventory at the end of the quarter under review amounted to $151.4 million, down from second-quarter fiscal 2018 value of $159.6 million.
Cash flow from operating activities was $190.9 million as of Feb 1, 2019, compared with $148.5 million as of Jan 26, 2018.
Fiscal 2019 Guidance
The company expects total revenues of $3.05 billion. Comparable store restaurant sales and retail sales are expected to grow 1-2%, up from the previously mentioned range of flat to up 1%. The company also aims to open eight stores in fiscal 2019.
Management continues to project earnings per diluted share of $8.95-$9.10 for fiscal 2019 compared with $8.87 in fiscal 2018.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
At this time, Cracker Barrel has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Cracker Barrel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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