On Thursday, BofA Securities adjusted its outlook on Cracker Barrel (NASDAQ:CBRL) shares, reducing the price target to $62 from $72 while maintaining an Underperform rating. The investment firm cited the restaurant's struggling same-store sales growth (SSSG) as the primary reason for the stock's underperformance relative to its industry peers.
Cracker Barrel, listed on NASDAQ:CBRL, has seen its shares decline by 27% year-to-date, which contrasts sharply with the S&P Restaurants Index's slight decrease of 1% over the same period. According to BofA Securities, this underperformance is directly linked to Cracker Barrel's SSSG trends, which have significantly diverged from the full-service restaurant (FSR) average.
Before the pandemic, in fiscal years 2018 and 2019, Cracker Barrel had maintained a 2 percentage point lead in SSSG compared to the FSR average. However, in 2020, the situation reversed, with the company's SSSG falling 1 percentage point below the FSR average. The gap has since widened post-COVID, with Cracker Barrel's SSSG lagging by approximately 10 percentage points behind the FSR average.
The price target revision reflects the ongoing challenges faced by Cracker Barrel in the competitive restaurant industry. The current SSSG trends suggest that the company is struggling to keep pace with the broader market, which has been recovering post-pandemic.
InvestingPro Insights
In the context of BofA Securities' revised outlook on Cracker Barrel, it's important to consider some additional metrics and tips from InvestingPro that can provide investors with a broader perspective. The company's market capitalization stands at $1.26 billion, with a Price to Earnings (P/E) ratio of 15.08, which reflects investor sentiment regarding its earnings potential. Notably, the adjusted P/E ratio for the last twelve months as of Q2 2024 is slightly more favorable at 13.26.
One of the key InvestingPro Tips for Cracker Barrel is its significant dividend yield, which is currently at 9.19%. This could be attractive to income-focused investors, especially considering that the company has maintained dividend payments for 43 consecutive years. This track record of consistent dividend payments may provide some reassurance amidst the stock's recent price volatility, which has seen a 19.19% decline over the last three months.
Moreover, despite short-term challenges, analysts predict that Cracker Barrel will be profitable this year, a sentiment supported by the company's profitability over the last twelve months. For those seeking more comprehensive analysis, there are additional InvestingPro Tips available, offering deeper insights into Cracker Barrel's financial health and market position. To access these tips and enhance your investment strategy, visit https://www.investing.com/pro/CBRL and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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