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Cracker Barrel (CBRL) Stock Down on Dividend Cut, Dismal View
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Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) recently announced an update on its third and fourth quarter of fiscal 2024 financial results. The company expects lower-than-anticipated traffic to negatively impact its performance. Additionally, it announced plans to accelerate investments in organic growth by reallocating capital and reducing its quarterly dividend to $0.25 per share from $1.30. Following the announcements, the stock declined 10.3% in after-hours trading on May 16.
Q3 & Q4 Fiscal 2024 Update
Management anticipates lower-than-expected results for the fiscal third and fourth quarters. In the fiscal third quarter, a store portfolio review led to several closures and associated expenses, including non-cash impairment charges. It cautions that this outlook is based on various assumptions, many beyond its control. Persistence of ongoing inflation, low consumer confidence and high interest rates are likely to negatively impact consumer behaviour and the potential company results.
Other Updates
CBRL emphasizes a strategic transformation plan to drive growth. It is implementing a multi-faceted strategy to enhance its brand by engaging a leading agency to strengthen its positioning, introducing innovative and craveable menu items and optimized pricing for value and profitability.
It aims to improve the guest experience through operational excellence and store redesigns, with 25-30 remodels planned for fiscal 2025. The company is also expanding its digital and off-premise business using Cracker Barrel Rewards program and leveraging guest data for better engagement. Additionally, it is upgrading employee training and development, simplifying roles and utilizing technology to enhance the employee experience.
While fiscal 2025 is expected to be an investment year, management expects its sales driving initiatives to support traffic improvements in the second half of fiscal 2026 and into fiscal FY27.
Fiscal 2025-27 Outlook
For fiscal 2025, management projects adjusted EBITDA to be roughly in line with or slightly lower than fiscal 2024 levels. It expects capital expenditures to be between $160 million and $180 million.
For fiscal 2026, adjusted EBITDA is suggested to increase, particularly in the second half. Capital expenditures are forecast to be between $180 million and $220 million.
In fiscal 2027, the company anticipates sales to be between $3.8 billion and $3.9 billion. Adjusted EBITDA is projected to be between $375 million and $425 million. Capital expenditures are envisioned in the $260-$300 million band.
Price Performance
Image Source: Zacks Investment Research
Shares of Cracker Barrel have declined 25.7% year to date compared with the industry's 2.8% decline. The downside was caused by a challenging macroeconomic environment. Also, softer comps and traffic concerns are potential headwinds.
Increased operating expenses due to commodity and wage inflation are concerns. CBRL anticipates continued margin pressure in the near future, especially in the upcoming fiscal third quarter. Estimates for fiscal 2024 earnings have declined in the past 30 days, depicting analysts' concern over the stock's growth potential.
Zacks Rank & Key Picks
Cracker Barrel currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests a rise of 27.5% and 36.7%, respectively, from the year-ago levels.
Brinker International, Inc. (EAT - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 213.4%, on average. Shares of EAT have risen 54.7% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5% and 39.2% growth, respectively, from the year-earlier actuals.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 12.9% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.4% growth, respectively, from the prior-year figures.
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Cracker Barrel (CBRL) Stock Down on Dividend Cut, Dismal View
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) recently announced an update on its third and fourth quarter of fiscal 2024 financial results. The company expects lower-than-anticipated traffic to negatively impact its performance. Additionally, it announced plans to accelerate investments in organic growth by reallocating capital and reducing its quarterly dividend to $0.25 per share from $1.30. Following the announcements, the stock declined 10.3% in after-hours trading on May 16.
Q3 & Q4 Fiscal 2024 Update
Management anticipates lower-than-expected results for the fiscal third and fourth quarters. In the fiscal third quarter, a store portfolio review led to several closures and associated expenses, including non-cash impairment charges. It cautions that this outlook is based on various assumptions, many beyond its control. Persistence of ongoing inflation, low consumer confidence and high interest rates are likely to negatively impact consumer behaviour and the potential company results.
Other Updates
CBRL emphasizes a strategic transformation plan to drive growth. It is implementing a multi-faceted strategy to enhance its brand by engaging a leading agency to strengthen its positioning, introducing innovative and craveable menu items and optimized pricing for value and profitability.
It aims to improve the guest experience through operational excellence and store redesigns, with 25-30 remodels planned for fiscal 2025. The company is also expanding its digital and off-premise business using Cracker Barrel Rewards program and leveraging guest data for better engagement. Additionally, it is upgrading employee training and development, simplifying roles and utilizing technology to enhance the employee experience.
While fiscal 2025 is expected to be an investment year, management expects its sales driving initiatives to support traffic improvements in the second half of fiscal 2026 and into fiscal FY27.
Fiscal 2025-27 Outlook
For fiscal 2025, management projects adjusted EBITDA to be roughly in line with or slightly lower than fiscal 2024 levels. It expects capital expenditures to be between $160 million and $180 million.
For fiscal 2026, adjusted EBITDA is suggested to increase, particularly in the second half. Capital expenditures are forecast to be between $180 million and $220 million.
In fiscal 2027, the company anticipates sales to be between $3.8 billion and $3.9 billion. Adjusted EBITDA is projected to be between $375 million and $425 million. Capital expenditures are envisioned in the $260-$300 million band.
Price Performance
Image Source: Zacks Investment Research
Shares of Cracker Barrel have declined 25.7% year to date compared with the industry's 2.8% decline. The downside was caused by a challenging macroeconomic environment. Also, softer comps and traffic concerns are potential headwinds.
Increased operating expenses due to commodity and wage inflation are concerns. CBRL anticipates continued margin pressure in the near future, especially in the upcoming fiscal third quarter. Estimates for fiscal 2024 earnings have declined in the past 30 days, depicting analysts' concern over the stock's growth potential.
Zacks Rank & Key Picks
Cracker Barrel currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter negative earnings surprise of 21.4%, on average. The stock has risen 90.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests a rise of 27.5% and 36.7%, respectively, from the year-ago levels.
Brinker International, Inc. (EAT - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 213.4%, on average. Shares of EAT have risen 54.7% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5% and 39.2% growth, respectively, from the year-earlier actuals.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 12.9% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.4% growth, respectively, from the prior-year figures.