It has been about a month since the last earnings report for Cracker Barrel Old Country Store (CBRL Quick QuoteCBRL - Free Report) . Shares have lost about 4.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Cracker Barrel’s Q3 Earnings & Revenues Miss Estimates

Cracker Barrel delivered third-quarter fiscal 2023 (ended April 28, 2023) results, with earnings and revenues missing the Zacks Consensus Estimate. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure.

The company witnessed a below expectations growth in the comparable store sales, due to a decline in the casual dining traffic toward the end of the quarter. The company anticipates the near-term environment to remain challenging due to heighten economic uncertainty, lower discretionary spending, and weaker consumer confidence.

Earnings & Revenues

In third-quarter fiscal 2023, the company reported adjusted earnings per share (EPS) of $1.21, missing the Zacks Consensus Estimate of $1.33. In the prior-year quarter, the company reported an adjusted EPS of $1.29.

Quarterly revenues of $832.7 million missed the consensus mark of $845 million. The top line increased 5.4% year over year. The company benefited from strong comparable store restaurant sales growth and menu innovation.

Comps Details

Comparable store restaurant sales rose 7.4% in the reported quarter compared with the same period in fiscal 2022. The upside was primarily backed by an 8.8% average menu price increase. Comparable store retail sales declined 4.6% year over year.

Operating Highlights

During the fiscal third quarter, the cost of goods sold (excluding depreciation and rent) came in at $262.2 million compared with $250 million reported in the prior-year quarter. As a percentage of total revenues, the cost of goods sold (excluding depreciation and rent) fell 10 basis points (bps) year over year to 31.5%. General and administrative expenses during the quarter came in at $45 million, up from $40 million reported in the prior-year quarter.

Adjusted operating income in the fiscal third quarter totaled $33.9 million, up from $33.6 million reported in the prior-year quarter. The adjusted operating margin was 4.1%, down 20 bps from the prior-year quarter’s levels. The downside was mainly due to higher general and administrative expenses and cost of retail goods sold, partially offset by lower restaurant cost of goods sold, lower labor and related expenses.

Balance Sheet

As of Apr 28, 2023, cash and cash equivalents were $22.5 million, down from $49.4 million as of Jan 29, 2023.

Inventory at the end of the fiscal third quarter amounted to $184.8 million, down from $187 million at the end of second-quarter fiscal 2023.

Long-term debt amounted to $444.5 million at the end of the fiscal third quarter compared with $454.1 million at the end of the previous quarter.

The company declared a cash dividend of $1.30 per share. The dividend will be paid out on Aug 8, 2023, to shareholders on record as of Jul 21, 2023.

Q4 Guidance

For fourth-quarter fiscal 2023, the company expects revenues to grow in the range of 1-3% year over year. The company anticipates contributions worth $30 million from cost savings and business model improvements. Adjusted operating income margin is anticipated to be in the range of 4.5% to 5.5%.

In fourth-quarter fiscal 2023, the company anticipates commodity inflation to be flat and wage inflation of 5% compared with the prior-year quarter’s levels.

Coming to store openings, the company expects to open one new Cracker Barrel unit and five to seven new Maple Street Biscuit company units during the fiscal fourth quarter. Capital expenditures during the quarter are anticipated in the range of $30-$35 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -14.27% due to these changes.

VGM Scores

At this time, Cracker Barrel has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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.

Performance of an Industry Player

Cracker Barrel is part of the Zacks Retail - Restaurants industry. Over the past month, Red Robin (RRGB Quick QuoteRRGB - Free Report) , a stock from the same industry, has gained 1%. The company reported its results for the quarter ended March 2023 more than a month ago.

Red Robin reported revenues of $417.97 million in the last reported quarter, representing a year-over-year change of +5.7%. EPS of $0.25 for the same period compares with -$0.12 a year ago.

Red Robin is expected to post a loss of $0.55 per share for the current quarter, representing a year-over-year change of +26.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.9%.

Red Robin has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.