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Is Cracker Barrel (CBRL) Doomed to Have a Terrible 2024 Too?
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Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) faced a challenging year in 2023, with its stock experiencing a 15.6% decline. This is in contrast with the industry and the S&P 500, which have seen increases of 8.7% and 25.1%, respectively.
The downside was primarily caused by high costs, traffic woes and dismal comps. Despite cost-saving initiatives, higher labor costs due to increased wages and investments in additional labor hours are expected to keep profits under pressure. The company is apprehensive regarding incurring inflationary costs. For the fiscal 2024, Cracker Barrel expects commodity inflation in the low single digits and hourly restaurant wage inflation in mid-single digits.
Although comps have increased in the past few quarters, they were softer in the first quarter of fiscal 2024. The downside in traffic can be considered a major hurdle for stocks in this space. In the first quarter of fiscal 2024, the company witnessed softer guest traffic, which was likely driven by lower consumer demand.
Can the Stock Stage a Comeback in 2024?
The company’s shares have displayed some resilience of late. In fact, the stock has increased 4.5% in the past month compared with the industry’s growth of 2%. The recent surge can primarily be attributed to a decrease in inflation. The Federal Reserve decided to keep interest rates unchanged, and Jerome Powell, the head of the U.S. central bank, mentioned that the unprecedented shift toward tighter monetary policy is probably finished. This comes as inflation is decreasing more rapidly than anticipated and the possibility of considering reductions in borrowing costs is coming ‘into view.’
However, the scenario for fiscal 2024 is still not encouraging for CBRL. Per the Zacks Consensus Estimate, the Zacks Rank #5 (Strong Sell) company’s earnings in the fiscal 2024 are likely to witness a decline of 12.6% year over year. In the past 30 days, earnings estimates for fiscal 2024 and 2025 have witnessed downward revisions of 18.6% and 16.3%, respectively.
Image Source: Zacks Investment Research
2 Restaurant Stocks Hogging the Limelight
Arcos Dorados Holdings Inc. (ARCO - Free Report) , which operates as a franchisee of McDonald's restaurants, sports a Zacks Rank #1(Strong Buy). The company’s shares have surged 51.3% year to date. The Zacks Consensus Estimate for 2024 earnings is pegged at 95 cents, indicating growth of 15.5% from the prior-year quarter’s levels. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8%. The company’s long-term earnings are expected to witness robust growth of 12.7%.
Dallas, TX-based Brinker International, Inc. (EAT - Free Report) also sports a Zacks Rank #1. The company is benefiting from improved menu pricing and a favorable menu item mix. On the back of sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies, its margins have expanded significantly.
The Zacks Consensus Estimate for fiscal 2024 earnings is pegged at $3.57, indicating growth of 26.2% from the prior-year quarter’s levels. In the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8.2%. Moreover, the company’s long-term earnings are expected to witness 16.6% growth. Shares of the company have increased 34.3% year to date.
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Is Cracker Barrel (CBRL) Doomed to Have a Terrible 2024 Too?
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) faced a challenging year in 2023, with its stock experiencing a 15.6% decline. This is in contrast with the industry and the S&P 500, which have seen increases of 8.7% and 25.1%, respectively.
The downside was primarily caused by high costs, traffic woes and dismal comps. Despite cost-saving initiatives, higher labor costs due to increased wages and investments in additional labor hours are expected to keep profits under pressure. The company is apprehensive regarding incurring inflationary costs. For the fiscal 2024, Cracker Barrel expects commodity inflation in the low single digits and hourly restaurant wage inflation in mid-single digits.
Although comps have increased in the past few quarters, they were softer in the first quarter of fiscal 2024. The downside in traffic can be considered a major hurdle for stocks in this space. In the first quarter of fiscal 2024, the company witnessed softer guest traffic, which was likely driven by lower consumer demand.
Can the Stock Stage a Comeback in 2024?
The company’s shares have displayed some resilience of late. In fact, the stock has increased 4.5% in the past month compared with the industry’s growth of 2%. The recent surge can primarily be attributed to a decrease in inflation. The Federal Reserve decided to keep interest rates unchanged, and Jerome Powell, the head of the U.S. central bank, mentioned that the unprecedented shift toward tighter monetary policy is probably finished. This comes as inflation is decreasing more rapidly than anticipated and the possibility of considering reductions in borrowing costs is coming ‘into view.’
However, the scenario for fiscal 2024 is still not encouraging for CBRL. Per the Zacks Consensus Estimate, the Zacks Rank #5 (Strong Sell) company’s earnings in the fiscal 2024 are likely to witness a decline of 12.6% year over year. In the past 30 days, earnings estimates for fiscal 2024 and 2025 have witnessed downward revisions of 18.6% and 16.3%, respectively.
Image Source: Zacks Investment Research
2 Restaurant Stocks Hogging the Limelight
Arcos Dorados Holdings Inc. (ARCO - Free Report) , which operates as a franchisee of McDonald's restaurants, sports a Zacks Rank #1(Strong Buy). The company’s shares have surged 51.3% year to date. The Zacks Consensus Estimate for 2024 earnings is pegged at 95 cents, indicating growth of 15.5% from the prior-year quarter’s levels. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8%. The company’s long-term earnings are expected to witness robust growth of 12.7%.
Dallas, TX-based Brinker International, Inc. (EAT - Free Report) also sports a Zacks Rank #1. The company is benefiting from improved menu pricing and a favorable menu item mix. On the back of sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies, its margins have expanded significantly.
The Zacks Consensus Estimate for fiscal 2024 earnings is pegged at $3.57, indicating growth of 26.2% from the prior-year quarter’s levels. In the past 60 days, earnings estimates for 2024 have witnessed an upward revision of 8.2%. Moreover, the company’s long-term earnings are expected to witness 16.6% growth. Shares of the company have increased 34.3% year to date.