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.

On an adjusted basis, earnings came in at $1.43 per share, topping the Thomson Reuters' consensus of $1.25 per share on the same basis. Revenue rose from $673.23 million to $702.67 million, also beating the consensus estimate of $694.06 million.

Daily Chart
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
Endo's Endgame What does the future hold for struggling pharma Endo? Hertz: Is it Time to Buy the Rental? Is it time to buy rental giant Hertz?

Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Mar 1, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

Posted in ...