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Why Is Cracker Barrel (CBRL) Up 4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Cracker Barrel Old Country Store (CBRL - Free Report) . Shares have added about 4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cracker Barrel due for a pullback? 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 Q3 Earnings & Revenues Top Estimates

Cracker Barrel reported better-than-expected results for the third quarter of fiscal 2019. Earnings surpassed the Zacks Consensus Estimate for the third straight quarter.

Adjusted earnings came in at $2.09 per share, which outpaced the Zacks Consensus Estimate of $2.05. The bottom line also increased 3% year over year on high expenses.

Revenues of $739.6 million surpassed the consensus mark of $734 million and also improved 3% from the prior-year quarter. The upside can be attributed to higher comparable restaurant sales.

Comps Details

Comparable store restaurant sales increased 1.3% in the reported quarter backed by a 3.1% uptick in average check. Comparable store restaurant traffic declined 1.8%. Also, the average menu price rose about 1.8%. However, comps compared unfavorably with the fiscal second quarter’s 3.8% rise.

Comparable store retail sales in the fiscal third quarter decreased 2.6% compared with a 1.4% decline in the second quarter.

Operating Highlights

Operating income in the fiscal third quarter totaled $65.1 million, up 2.8% year over year. Operating margin was 8.8%, flat from the prior year quarter.
As a percentage of total revenues, rise in labor as well as related expenses, other operating expenses, and general and administrative expenses were overshadowed by decline in cost of goods sold.

Balance Sheet

As of May 3, 2019, cash and cash equivalents were $167.6 million, up from $174.3 million as of Apr 27, 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 $152.6 million, down from third-quarter fiscal 2018 value of $157 million.

Net cash provided by operating activities was $252.6 million as of May 3, 2019, compared with $221 million as of Apr 27, 2018.

Fiscal 2019 Guidance

Cracker Barrel continues to expect total revenues of nearly $3.05 billion. Comparable store restaurant sales and retail sales are expected to grow 2%, up from the previously guided range of 1-2%. 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.

VGM Scores

At this time, Cracker Barrel has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Outlook

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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