We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CBRL Stock Rises 21% in a Month: Should You Buy, Sell or Hold?
Read MoreHide Full Article
Shares of Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) have appreciated 21.1% in the past month compared with the Zacks Retail - Restaurants industry’s 6.8% rise and the S&P 500’s 3.4% increase. The uptick is supported by the company’s focus on menu innovation, strategic initiatives and expansion efforts. The company’s strategic transformation plan is expected to enhance guest experience and profitability, driving stronger performance in the fiscal 2025 through targeted investments and a new loyalty program.
CBRL stock has even outperformed some other industry players in the past month, including BJ's Restaurants, Inc. (BJRI - Free Report) , Brinker International, Inc. (EAT - Free Report) and CAVA Group, Inc. (CAVA - Free Report) . During the said time frame, shares of BJRI, EAT and CAVA have rallied 10.5%, 10.6% and 9.3%, respectively.
CBRL’s 1-Month Price Performance
Image Source: Zacks Investment Research
CBRL Trading Above 50-Day SMA
Image Source: Zacks Investment Research
Technical indicators suggest continued strong performance for CBRL. The stock trades above its 50-day moving averages, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in CBRL's financial health and prospects.
Key Fundamentals Supporting CBRL’s Stock Growth
Menu Innovation and Pricing: Cracker Barrel is prioritizing menu innovation and strategic pricing to drive growth. The company is introducing new offerings, including shareable starters and specialty beverages while optimizing pricing to enhance value. These initiatives aim to attract customers and support profitability.
CBRL is enhancing its menu presentation and implementing a barbell pricing strategy to strengthen its value proposition. The company is optimizing prices by considering consumer willingness to pay, competitor pricing and store operating costs. In first-quarter fiscal 2024, approximately 150 stores moved to a higher pricing tier, while around 70 stores shifted to a lower tier. These adjustments have yielded positive results, evidenced by improved value scores following the August price increases. Cracker Barrel will continue to monitor pricing to support profitability growth.
Strategic Transformation: In fiscal 2024, the company announced its strategic transformation plan, which focuses on three primary objectives — driving relevancy, enhancing the guest experience and increasing profitability. Cracker Barrel is revising its capital allocation strategy to prioritize investments that drive organic growth in support of these goals.
The company is also redefining its brand through improvements in in-store design and atmosphere. It is currently testing prototypes for store remodels, which include full remodels and store refreshes. The company intends to complete 25-30 full remodels and 25-30 refreshes in 2025. Cracker Barrel is committed to a disciplined approach to this remodeling initiative, viewing it as a vital investment to enhance the guest experience and deliver value to shareholders.
Sales-Building Initiatives: Cracker Barrel is actively enhancing its marketing strategies to navigate the competitive restaurant landscape. It emphasizes brand differentiation, menu variety and value to attract both loyal customers and new guests. CBRL is committed to expanding its off-premise business and investing in digital enhancements to elevate the guest experience and support growth initiatives.
CBRL launched its new loyalty program, Cracker Barrel Rewards, in first-quarter fiscal 2024. This program aims to leverage guest data to gain insights into consumer behavior, enabling the company to identify opportunities to enhance visit frequency and engagement.
As of Aug. 2, 2024, Cracker Barrel had 6 million loyalty program members, exceeding initial expectations. These members visit 50% more often and spend 10% more per visit than nonmembers, with an average retail spend that is 40% higher. The program has positively influenced guest behavior, increasing visit frequency. It is leveraging insights from the program's data to drive long-term traffic and profitable growth.
CBRL Trading at a Discount
Image Source: Zacks Investment Research
The company is currently trading at a discount to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price increase in the past month, it remains an attractive option for investors looking for a suitable entry point.
Obstacles Hindering CBRL’s Growth Trajectory
The company faces several risks, including declining comparable store sales due to reduced guest traffic and ongoing macroeconomic pressures. Rising labor costs and inflation are also likely to strain profit margins despite initiatives aimed at improving operational efficiency and driving growth.
Cracker Barrel reported its fourth-quarter fiscal 2024 results, with earnings and revenues falling short of the Zacks Consensus Estimate. The company posted adjusted earnings per share (EPS) of 98 cents, missing expectations by 16.2%. Quarterly revenues reached $894.4 million, below the consensus mark of $899 million. Comparable store retail sales declined 4.2% year over year due to lower guest traffic. (read more: Cracker Barrel Q4 Earnings & Revenues Lag, Stock Down)
Buy, Sell, or Hold – CBRL Stock?
Cracker Barrel faces several challenges, including declining comparable store sales attributed to reduced guest traffic and ongoing macroeconomic pressures. For fiscal 2025, the company expects commodity inflation to range from 2% to 3%, alongside hourly wage inflation of 3-4%. These factors are likely to put pressure on profit margins.
However, the company is actively pursuing menu innovation and strategic initiatives aimed at enhancing the guest experience and profitability. Its new loyalty program is expected to boost customer engagement and visit frequency, contributing to long-term growth. Existing stakeholders are advised to hold their positions in this Zacks Rank #3 (Hold) stock. Prospective investors should monitor how Cracker Barrel manages its challenges before proceeding with any investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
CBRL Stock Rises 21% in a Month: Should You Buy, Sell or Hold?
Shares of Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) have appreciated 21.1% in the past month compared with the Zacks Retail - Restaurants industry’s 6.8% rise and the S&P 500’s 3.4% increase. The uptick is supported by the company’s focus on menu innovation, strategic initiatives and expansion efforts. The company’s strategic transformation plan is expected to enhance guest experience and profitability, driving stronger performance in the fiscal 2025 through targeted investments and a new loyalty program.
CBRL stock has even outperformed some other industry players in the past month, including BJ's Restaurants, Inc. (BJRI - Free Report) , Brinker International, Inc. (EAT - Free Report) and CAVA Group, Inc. (CAVA - Free Report) . During the said time frame, shares of BJRI, EAT and CAVA have rallied 10.5%, 10.6% and 9.3%, respectively.
CBRL’s 1-Month Price Performance
Image Source: Zacks Investment Research
CBRL Trading Above 50-Day SMA
Image Source: Zacks Investment Research
Technical indicators suggest continued strong performance for CBRL. The stock trades above its 50-day moving averages, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in CBRL's financial health and prospects.
Key Fundamentals Supporting CBRL’s Stock Growth
Menu Innovation and Pricing: Cracker Barrel is prioritizing menu innovation and strategic pricing to drive growth. The company is introducing new offerings, including shareable starters and specialty beverages while optimizing pricing to enhance value. These initiatives aim to attract customers and support profitability.
CBRL is enhancing its menu presentation and implementing a barbell pricing strategy to strengthen its value proposition. The company is optimizing prices by considering consumer willingness to pay, competitor pricing and store operating costs. In first-quarter fiscal 2024, approximately 150 stores moved to a higher pricing tier, while around 70 stores shifted to a lower tier. These adjustments have yielded positive results, evidenced by improved value scores following the August price increases. Cracker Barrel will continue to monitor pricing to support profitability growth.
Strategic Transformation: In fiscal 2024, the company announced its strategic transformation plan, which focuses on three primary objectives — driving relevancy, enhancing the guest experience and increasing profitability. Cracker Barrel is revising its capital allocation strategy to prioritize investments that drive organic growth in support of these goals.
The company is also redefining its brand through improvements in in-store design and atmosphere. It is currently testing prototypes for store remodels, which include full remodels and store refreshes. The company intends to complete 25-30 full remodels and 25-30 refreshes in 2025. Cracker Barrel is committed to a disciplined approach to this remodeling initiative, viewing it as a vital investment to enhance the guest experience and deliver value to shareholders.
Sales-Building Initiatives: Cracker Barrel is actively enhancing its marketing strategies to navigate the competitive restaurant landscape. It emphasizes brand differentiation, menu variety and value to attract both loyal customers and new guests. CBRL is committed to expanding its off-premise business and investing in digital enhancements to elevate the guest experience and support growth initiatives.
CBRL launched its new loyalty program, Cracker Barrel Rewards, in first-quarter fiscal 2024. This program aims to leverage guest data to gain insights into consumer behavior, enabling the company to identify opportunities to enhance visit frequency and engagement.
As of Aug. 2, 2024, Cracker Barrel had 6 million loyalty program members, exceeding initial expectations. These members visit 50% more often and spend 10% more per visit than nonmembers, with an average retail spend that is 40% higher. The program has positively influenced guest behavior, increasing visit frequency. It is leveraging insights from the program's data to drive long-term traffic and profitable growth.
CBRL Trading at a Discount
Image Source: Zacks Investment Research
The company is currently trading at a discount to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price increase in the past month, it remains an attractive option for investors looking for a suitable entry point.
Obstacles Hindering CBRL’s Growth Trajectory
The company faces several risks, including declining comparable store sales due to reduced guest traffic and ongoing macroeconomic pressures. Rising labor costs and inflation are also likely to strain profit margins despite initiatives aimed at improving operational efficiency and driving growth.
Cracker Barrel reported its fourth-quarter fiscal 2024 results, with earnings and revenues falling short of the Zacks Consensus Estimate. The company posted adjusted earnings per share (EPS) of 98 cents, missing expectations by 16.2%. Quarterly revenues reached $894.4 million, below the consensus mark of $899 million. Comparable store retail sales declined 4.2% year over year due to lower guest traffic. (read more: Cracker Barrel Q4 Earnings & Revenues Lag, Stock Down)
Buy, Sell, or Hold – CBRL Stock?
Cracker Barrel faces several challenges, including declining comparable store sales attributed to reduced guest traffic and ongoing macroeconomic pressures. For fiscal 2025, the company expects commodity inflation to range from 2% to 3%, alongside hourly wage inflation of 3-4%. These factors are likely to put pressure on profit margins.
However, the company is actively pursuing menu innovation and strategic initiatives aimed at enhancing the guest experience and profitability. Its new loyalty program is expected to boost customer engagement and visit frequency, contributing to long-term growth. Existing stakeholders are advised to hold their positions in this Zacks Rank #3 (Hold) stock. Prospective investors should monitor how Cracker Barrel manages its challenges before proceeding with any investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.