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Cracker Barrel (CBRL) Down 5.6% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Cracker Barrel Old Country Store (CBRL - Free Report) . Shares have lost about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Cracker Barrel Post Wider-Than-Expected Loss in Q4

Cracker Barrel reported fourth-quarter fiscal 2020 (ended Jul 31, 2020) results, wherein earnings missed the Zacks Consensus Estimate, while revenues beat the same. However, both the metrics declined on a year-over-year basis. Post the results, shares of the company slipped approximately 5% during trading hours on Sep 16.

Adjusted loss (excluding the impairment charges related to store assets, expenses related to COVID-19, the impairment charge related to Punch Bowl Social, and the related tax effects) was 85 cents per share during the quarter. Notably, the figure was 54.5% wider than the Zacks Consensus Estimate of a loss of 55 cents. In the prior-year quarter, the company reported earnings per share of $2.70.

Revenues of $495.1 million beat the consensus mark of $484 million by 2.3%. However, the figure declined 37.1% on a year-over-year basis, primarily due to lower traffic owing to the social-distancing protocols. Of revenues, 81.1% was contributed by the Restaurant segment and 18.9% was added by Retail supply chain.

Comps Details

Comparable store restaurant sales declined 39.2% in the reported quarter owing to a 40.7% fall in comparable store restaurant traffic, partially offset by a 1.5% uptick in average check. Moreover, comparable store retail sales in the fiscal fourth quarter declined 32.3% from the prior-year quarter’s figure.

Operating Highlights

Cost of goods sold (exclusive of depreciation and rent) increased 170 basis points (bps) year over year. General and administrative expenses rose 320 bps year over year.

Operating income in the fiscal fourth quarter totaled $40.1 million compared with $79.4 million in the prior-year quarter. Operating margin was reported at 8.1%, down 200 bps from the prior-year quarter. Adjusted operating loss for the fiscal fourth quarter was $20 million.

Balance Sheet

As of Jul 31, 2020, cash and cash equivalents were $437 million, up from $36.9 million as of Aug 2, 2019.

Inventory at the end of the quarter under review amounted to $139.1 million, down from $155 million at the end of fourth-quarter fiscal 2019.

Long-term debt amounted to $910 million at the end of the quarter, up from $400 million at the end of the prior-year quarter.

Net cash provided by operating activities was $161 million in the fiscal 2020 compared with $362.8 million in the prior year.

Meanwhile, during the fourth quarter of fiscal 2020, the company entered into two sale-leaseback transactions involving a group of 64 properties (expiring in 2021) to bolster liquidity and strengthen its financial position.

Firstly, the company entered into a new 20-year lease agreement with Oak Street Real Estate Capital. Notably, the transaction resulted in approximately $70 million of non-cash gain on sale of assets during the fourth quarter. Additionally, it entered into a second sale-leaseback transaction (expiring in the first quarter of fiscal 2021), whereby the company sold an additional 62 properties to Oak Street for a purchase price of approximately $150 million.

Fiscal 2020 Highlights

Fiscal 2020 GAAP loss per diluted share came in at $1.36 against prior-year earnings of $9.27.

Total revenues for fiscal 2020 came in at $2,522.8 million compared with $3,071.9 million in fiscal 2019.

GAAP operating income in fiscal 2020 totaled $103.6 million (or 4.1% of total revenues), compared with $282.8 million (or 9.2%) in the prior fiscal.

General and administrative expenses for fiscal 2020 was reported at $147 million compared with $152.8 million in fiscal 2019.

Fiscal 2021 Outlook

to the coronavirus crisis, the company expects operations to be significantly impacted by factors such as capacity restrictions, jurisdictional regulations and state of economy reopenings. Notably, it expects the pandemic scenario to continue in the foreseeable future. Therefore, owing to the uncertainty tied to the crisis, the company is not providing any customary annual guidance.

However, the company stated that it anticipates capital expenditures of approximately $100 million for fiscal 2021.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -86.17% due to these changes.

VGM Scores

Currently, Cracker Barrel has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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

Cracker Barrel has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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