Back to top

Image: Bigstock

Cracker Barrel Gears Up for Q3 Earnings: Key Factors to Note

Read MoreHide Full Article

Key Takeaways

  • CBRL is expected to report third-quarter EPS of $0.23, a 73.9% drop from the $0.88 reported a year ago.
  • Menu upgrades and loyalty program growth are likely to have driven demand across dayparts.
  • Egg inflation, weak early-quarter traffic and higher costs likely pressured margins and retail sales.

Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) is scheduled to report third-quarter fiscal 2025 results on June 5. 

CBRL’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 22.5%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Trend in Estimate Revision of CBRL

The Zacks Consensus Estimate for fiscal third-quarter earnings per share is pegged at 23 cents, indicating a deterioration of 73.9% from 88 cents reported in the year-ago quarter.

For revenues, the consensus mark is pegged at $826.6 million. The projection indicates a 1.2% rise from the year-ago quarter’s reported figure.

Let us take a look at how things might have shaped up in the quarter to be reported.

Factors Likely to Shape CBRL’s Quarterly Results

Cracker Barrel’s fiscal third-quarter performance is expected to have reflected steady momentum in key transformation initiatives and operational enhancements aimed at reinvigorating guest traffic and optimizing profitability. Focused efforts around menu innovation, back-of-house process improvements and store remodeling are likely to have supported performance in the to-be-reported quarter.

A strong emphasis on menu enhancement, particularly around the dinner daypart, is likely to have bolstered demand. New offerings, such as the Louisiana-style shrimp skillet and shrimp & grits, along with expanded pancake selections, might have resonated well with guests. Continued traction in breakfast and lunch segments, coupled with stable average checks, is likely to have contributed to sequential traffic improvements across all dayparts in the fiscal third quarter.

On the digital and off-premise front, the fiscal third quarter is expected to have seen a normalization following the holiday surge in Heat n’ Serve and catering volumes. While this seasonal moderation might have weighed on traffic comps, it is likely to have been partially offset by a stronger dine-in mix, pricing discipline and loyalty program engagement. Strength in the Cracker Barrel Rewards program, combined with growing membership and increased visit frequency among enrolled customers, is likely to have aided its performance in the to-be-reported quarter.

However, traffic softness in the early part of the quarter, exacerbated by inclement weather and broader consumer spending anxiety, might have negatively impacted the company’s performance in the fiscal third quarter. Our model predicts retail revenues to fall 1.4% year over year to $143.4 million.

Macroeconomic challenges, including inflationary pressures, elevated egg costs and cautious consumer sentiment, might have created headwinds during the fiscal third quarter. Egg-related commodity inflation, caused by supply constraints following avian influenza, is expected to have contributed roughly $4 million in incremental costs. Additionally, one-time marketing investments and training expenses linked to the brand refinement initiative and service model enhancements are likely to have exerted short-term pressure on margins. Our model predicts fiscal third-quarter adjusted EBITDA to fall 4.5% year over year to $45.8 million.

What Our Model Says About CBRL Stock

Our proven model does not conclusively predict an earnings beat for Cracker Barrel this time. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. However, that is not the case here.

Earnings ESP for CBRL: Cracker Barrel currently has an Earnings ESP of -11.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Cracker Barrel’s Zacks Rank: The company has a Zacks Rank #3 at present.

Stocks With the Favorable Combination

Here are three companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Dollar General Corporation (DG - Free Report) currently has an Earnings ESP of +2.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at $1.47, implying a 10.9% year-over-year decline. Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $10.29 billion, which indicates an increase of 3.8% from the figure reported in the prior-year quarter. DG delivered a trailing four-quarter earnings surprise of 1.2%, on average.

The Kroger Co. (KR - Free Report) currently has an Earnings ESP of +0.38% and a Zacks Rank of 3. KR’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $45.38 billion, which indicates a 0.3% rise from the figure reported in the year-ago quarter.

The company is expected to register an increase in the bottom line. The consensus estimate for Kroger’s first-quarter earnings is pegged at $1.44 per share, up 1% from the year-ago quarter. KR delivered a trailing four-quarter earnings surprise of 2.6%, on average.

Victoria's Secret & Co. (VSCO - Free Report) currently has an Earnings ESP of +54.55% and a Zacks Rank #3. The Zacks Consensus Estimate for current-quarter earnings per share is pegged at 4 cents, down from 12 cents registered in the year-ago period.

Victoria's Secret's quarterly revenues are pegged at $1.33 billion, which indicates a decline of 2.1% from the prior-year quarter. VSCO delivered a trailing four-quarter earnings surprise of 12.3%, on average.

Published in