Cracker Barrel (CBRL) Rallies Sharply as it Cracks Expectations
Shares of Cracker Barrel Old Country Store (CBRL: Analysis) rallied sharply this week, after the retail and restaurant chain reported second quarter earnings that topped analyst estimates.
The Lebanon, Tennessee-based company posted earnings of $1.47 per share, or $35.17 million, up from the $1.10 per share, or $25.61 million, it posted in the prior year quarter.
The company attributed its robust growth to a 3.3% rise in same-store sales at its restaurants, which was driven by stronger marketing and menu initiatives. The average check per table also increased 3.1%, due to a 2.6% increase in menu prices. This promising growth suggests that Cracker Barrel has pricing power and is able to pass on rising costs to customers.
This is a boon for the company, since gas prices, tax increases and decreased discretionary spending are all expected to weigh on its bottom line in 2013. Commodity costs - which include vegetables, meat, poultry and dairy products - are expected to rise 4% to 5% in 2013. CEO Sandra Cochran acknowledged these challenges, stating, "As we look to the second half of the year, our industry is facing several pressures."
Restaurant traffic rose 0.2%. Meanwhile, same-store sales at its retail business, which sells assorted products in front of its restaurants, posted same-store sales growth of 3.1%.
During the quarter, Cracker Barrel revamped 200 of its 1,600 billboards nationwide in a bid to promote its 14 Country Dinner Plates which sell for $7.69 each. The company is also promoting a healthier menu called "Wholesome Fixin's", with menu items that have less than 500 calories for breakfast and 600 calories for dinner.
This marks its fifth consecutive quarter of same-store sales and traffic growth. The company finished the quarter with 621 company-owned locations across 42 states. It does not have an overseas presence. The company intends to open eight new locations in the coming year, a reduction from its previous forecast of 9 to 11 new stores.
Looking forward, Cracker Barrel forecasts third quarter earnings between 90 cents to 95 cents per share, in line with the consensus expectation of 92 cents per share.
Cracker Barrel has notably been locked in a heated proxy battle against activist investor Sardar Biglari, and spent $3 million attempting to keep the investor away from the company's board.
Shares of Cracker Barrel trade at 13.77 times forward earnings with a 5-year PEG ratio of 1.61. The stock pays a quarterly dividend of 50 cents per share - a 2.65% yield at current prices.
Other News About CBRL
Cracker Barrel Old Country Store Earnings Cracker Barrel tops Wall Street estimates. Cracker Barrel's Earnings Call Transcript A look at management's key points in the second quarter. Other Stocks in the News
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