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Why Is Cracker Barrel (CBRL) Down 6% 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 lost about 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 Q1 Earnings Miss, Revenues Top Estimates
Cracker Barrel Old Country Store reported mixed first-quarter fiscal 2022 (ended Oct 29, 2021) results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. However, both the top and bottom lines improved year over year.
The company benefited from robust comparable store restaurant sales, average weekly sales volumes improvement on account of increase in dine-in traffic, retained off-premise volumes, and robust retail performance.
Earnings & Revenues
The company’s fiscal first-quarter adjusted earnings per share of $1.52 lagged the Zacks Consensus Estimate of $1.63. In the prior-year quarter, the company had reported an adjusted earnings per share of 69 cents.
Cracker Barrel reported revenues of $784.9 million during the quarter under review, which surpassed the consensus mark of $773 million. However, the top line improved 21% on a year-over-year basis. The company benefited from improvement in both restaurant and retail comparable store sales.
Comps Details
Comparable store restaurant sales increased 1.4% in the reported quarter compared with the same period in fiscal 2019. Comparable store restaurant sales jumped 19% year over year. Comparable retail sales jumped 17.6% and 29.1%, compared with the same period in 2019 and 2021, respectively.
During the fiscal first quarter, comparable store off-premise sales soared 168% compared with the first quarter of 2019.
Operating Highlights
During the fiscal first quarter, cost of goods sold (exclusive of depreciation and rent) increased 10 basis points (bps) year over year to 30.9%. General and administrative expenses contracted 90 bps year over year to 5.2%.
Adjusted operating income in the fiscal first quarter totaled $46.1 million compared with $27.7 million in the prior-year quarter. Adjusted operating margin was 5.9%, compared with 4.3% in the prior-year quarter. This can be attributed to better-than-expected sales performance, particularly in the company’s retail business.
Balance Sheet
As of Oct 29, 2021, cash and cash equivalents were $125.9 million, compared with $597.7 million as of Oct 30, 2020.
Inventory at the end of the fiscal first quarter amounted to $159.6 million, down from $155.7 million at the end of first-quarter fiscal 2021.
Long-term debt amounted to $377 million at the end of the quarter, up from $910 million at the end of the prior-year quarter.
For the three-months ended Oct 29, 2021, net cash provided by operating activities was $23 million compared with $57 million in the year-ago period.
Q2 Outlook
Going forward, the company expects improvement in sales. It anticipates fiscal second-quarter comparable store restaurant sales growth compared with fiscal 2019. Comparable store restaurant sales growth is anticipated to be higher than first-quarter fiscal 2022. Operating margin in the fiscal second quarter is expected to be 5.5-6%. Operating margins in the fiscal second quarter will continue to bear the impact of significant wage, commodity, and other operating expenses inflation, and higher expenses.
Fiscal 2022 Outlook
The company anticipates capital expenditure of nearly $120 million. Commodity inflation and constant mix wage inflation is expected to be in the high-single digits. Meanwhile, the effective tax rate for the fiscal second quarter is anticipated to be nearly 17%.
The company expects to open three new Cracker Barrel locations and 15 new Maple Street Biscuit Company locations.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -36.2% due to these changes.
VGM Scores
Currently, Cracker Barrel has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cracker Barrel has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Cracker Barrel (CBRL) Down 6% Since Last Earnings Report?
A month has gone by since the last earnings report for Cracker Barrel Old Country Store (CBRL - Free Report) . Shares have lost about 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 Q1 Earnings Miss, Revenues Top Estimates
Cracker Barrel Old Country Store reported mixed first-quarter fiscal 2022 (ended Oct 29, 2021) results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. However, both the top and bottom lines improved year over year.
The company benefited from robust comparable store restaurant sales, average weekly sales volumes improvement on account of increase in dine-in traffic, retained off-premise volumes, and robust retail performance.
Earnings & Revenues
The company’s fiscal first-quarter adjusted earnings per share of $1.52 lagged the Zacks Consensus Estimate of $1.63. In the prior-year quarter, the company had reported an adjusted earnings per share of 69 cents.
Cracker Barrel reported revenues of $784.9 million during the quarter under review, which surpassed the consensus mark of $773 million. However, the top line improved 21% on a year-over-year basis. The company benefited from improvement in both restaurant and retail comparable store sales.
Comps Details
Comparable store restaurant sales increased 1.4% in the reported quarter compared with the same period in fiscal 2019. Comparable store restaurant sales jumped 19% year over year. Comparable retail sales jumped 17.6% and 29.1%, compared with the same period in 2019 and 2021, respectively.
During the fiscal first quarter, comparable store off-premise sales soared 168% compared with the first quarter of 2019.
Operating Highlights
During the fiscal first quarter, cost of goods sold (exclusive of depreciation and rent) increased 10 basis points (bps) year over year to 30.9%. General and administrative expenses contracted 90 bps year over year to 5.2%.
Adjusted operating income in the fiscal first quarter totaled $46.1 million compared with $27.7 million in the prior-year quarter. Adjusted operating margin was 5.9%, compared with 4.3% in the prior-year quarter. This can be attributed to better-than-expected sales performance, particularly in the company’s retail business.
Balance Sheet
As of Oct 29, 2021, cash and cash equivalents were $125.9 million, compared with $597.7 million as of Oct 30, 2020.
Inventory at the end of the fiscal first quarter amounted to $159.6 million, down from $155.7 million at the end of first-quarter fiscal 2021.
Long-term debt amounted to $377 million at the end of the quarter, up from $910 million at the end of the prior-year quarter.
For the three-months ended Oct 29, 2021, net cash provided by operating activities was $23 million compared with $57 million in the year-ago period.
Q2 Outlook
Going forward, the company expects improvement in sales. It anticipates fiscal second-quarter comparable store restaurant sales growth compared with fiscal 2019. Comparable store restaurant sales growth is anticipated to be higher than first-quarter fiscal 2022. Operating margin in the fiscal second quarter is expected to be 5.5-6%. Operating margins in the fiscal second quarter will continue to bear the impact of significant wage, commodity, and other operating expenses inflation, and higher expenses.
Fiscal 2022 Outlook
The company anticipates capital expenditure of nearly $120 million. Commodity inflation and constant mix wage inflation is expected to be in the high-single digits. Meanwhile, the effective tax rate for the fiscal second quarter is anticipated to be nearly 17%.
The company expects to open three new Cracker Barrel locations and 15 new Maple Street Biscuit Company locations.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -36.2% due to these changes.
VGM Scores
Currently, Cracker Barrel has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cracker Barrel has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.