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Cracker Barrel (CBRL) Q2 Earnings Beat Estimates, Up Y/Y

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Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) reported mixed second-quarter fiscal 2020 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. Post the results, shares of the company declined nearly 4% during trading hours on Feb 25.

Adjusted earnings came in at $2.70 per share, which outpaced the Zacks Consensus Estimate of $2.44 by 10.7%. The bottom line also increased 7.1% year over year. With this, the company posted earnings beat for the sixth straight quarter.

Revenues of $846.1 million missed the consensus mark of $847.6 million by 0.2% but increased 4.2% from the prior-year quarter’s figure. The upside was primarily driven by positive comparable restaurant sales, opening of four new Cracker Barrel locations and acquisition of 28 company-owned Maple Street locations.

Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise

 

Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise

Cracker Barrel Old Country Store, Inc. price-consensus-eps-surprise-chart | Cracker Barrel Old Country Store, Inc. Quote

 

Comps Details

Comparable store restaurant sales increased 3.8% in the reported quarter courtesy of a 4% uptick in average check, partially offset by a 0.2% decline in comparable store restaurant traffic. Also, the average menu price rose about 2.2%. Nonetheless, comparable store retail sales in fiscal second quarter inched up 1.3% from the prior-year quarter’s figure.

Operating Highlights

Operating income in fiscal second quarter totaled $79.1 million, up 3.2% year over year. Operating margin was 9.4%, down 10 basis points from the prior-year quarter’s figure.

The decline in operating margin was caused by increases in operating as well as general and administrative expenses, partially offset by reductions in cost of goods sold and labor-related expenses.

Balance Sheet

As of Jan 31, 2020, cash and cash equivalents were $72.8 million, down from $169.6 million as of Feb 1, 2019. Long-term debt amounted to $460 million at the end of the quarter, up from $400 million in the prior-year quarter.

Inventory at the end of the quarter under review amounted to $157.4 million, up from $151.4 million at the end of first-quarter fiscal 2018.

Net cash provided by operating activities was $184 million in fiscal second quarter compared with $190.9 million in the prior-year quarter.

Additionally, in the quarter under review, the company repurchased $5.8 million of shares.

Fiscal 2020 Outlook

Cracker Barrel expects total revenues in the range of $3.15-$3.2 billion. The company expects comparable store restaurant sales growth in the range of 2-2.5%, while comparable store retail sales growth is expected to be approximately flat. It continues to expect menu pricing to be approximately 2%.

The company expects capital expenditure of approximately $125 million and an effective tax rate of 16%.

Furthermore, Cracker Barrel aims to open six Cracker Barrel stores and one Maple Street location in fiscal 2020. It also plans to convert six of the seven Holler & Dash locations to Maple Street in the upcoming months.

Management continues to project GAAP earnings per share in the range of $8.5-$8.65 for fiscal 2020. The projection includes the impact of 80 cents owing to investment in Punch Bowl Social as well as 15 cents due to transaction and integration expenses related to the acquisition of Maple Street.

Zacks Rank & Key Picks

Cracker Barrel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Few better-ranked stocks in the same space are Texas Roadhouse, Inc. (TXRH - Free Report) , Brinker International, Inc. (EAT - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) . Texas Roadhouse sports a Zacks Rank #1, while  Brinker International and Chipotle Mexican Grill carry a Zacks Rank #2 (Buy).

Texas Roadhouse has trailing four-quarter positive earnings surprise of 4.3%, on average. The company’s earnings beat estimates in three of the last four quarters.

2020 earnings for Brinker International is expected to rise 10.2%.

Chipotle Mexican Grill has an expected three-five year earnings per share growth rate of 19.3%.

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